Leopard backs cross-border kenaf play

The high protein content makes kenaf an attractive and inexpensive complement for animal feeding products. The strong fibers are of interest to car manufacturers and construction companies seeking to enhance or replace more expensive synthetic materials. Further demand comes from the pulp and paper industry where kenaf is seen as an environmentally friendly alternative to wood pulp.

Engage Resources can take a lot of credit for commercializing the plant. Four years ago, the company recognized the underestimated potential of kenaf and committed capital to developing more efficient methods for producing the plant in Southeast Asia. Hundreds of local farmers were contracted to grow kenaf for processing or make kenaf-based products themselves.

"People can use kenaf very flexibly. They use the leaves, bask and the core for applications in various industries with a lot of value-added products," says Richard Intrator, CIO at Leopard Cambodia Fund, which recently invested in Engage. He is convinced that the plant can become the next pan-Asian success story in the agricultural sector.

The fund, which was launched by frontier markets-focused GP Leopard Capital in 2008, has $34.1 million in assets under management. It has made more than 14 investments in Cambodia, Thailand and Laos across the telecom, financial services, food and beverage, agriculture, energy and utility sectors.

A small but significant sum of $1 million has been committed to Engage so it can expand its operations throughout the region and in Cambodia in particular. "Even through kenaf grows in Thailand or Cambodia, it is used in South Korea, Japan and a number of locations," Intrator tells AVCJ. "It is just an interesting place for us to be foreshadowing agricultural development in Asia."

Leopard declined to disclose the Engage share of Southeast Asia's kenaf products market, but its customer base is known to extend to South Korea, France, the US and Thailand. Engage therefore represents something of an outlier in the Leopard portfolio - a company that can claim an international client base in a niche area of a sector that has so far received little attention from private equity.

Although more is expected of Cambodian agriculture, AVCJ Research has only one other record of an investment in the sector - Leopard's $2 million commitment to Cambodia Plantations in 2009, which was intended to support agricultural modernization and broaden rice cultivation in the country.

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• Topics
• Southeast Asia
• Industrials
• Expansion
• Southeast Asia
• Cambodia
• Leopard Capital
• Growth capital
• Agriculture