The family office of Hong Kong consumer goods and supply chain giant Fung Group is expanding into new investment areas such as China food safety by moving to a joint general partner (GP) investment structure.
“This is a good way to help the family office expand into new areas without having to significantly expand its size,” said Monica Tsai, managing director at Fung Investment Management.
This means that family offices will jointly manage investment funds with other GPs to increase the scale of their investments.
“We are focusing on food brands, especially those outside China, that have growth potential in China to help solve China’s food safety issues,” Tsui said during a panel at the HKVCA China Private Equity Summit in Hong Kong last week.
Monica Tse
FANG Investment Management
Fung Investment Management is the sole family office of Victor Fung, Chairman, and William Fung, Vice Chairman, of the Fung Group, the controlling shareholder of a privately held conglomerate that operates across the global consumer goods supply chain, including trading, logistics, distribution and retail.
Family offices’ investment portfolios include real estate and private equity, and they also provide planning and management services to family members.
Victor Fan’s interests in this sector give him a bias towards alternative investments.
Previously, Fung Investment Management had in-house investment managers in Europe, the United States and Asia to invest in supply chain and retail-related areas adjacent to Fung Group’s core business, according to Mr. Tsi.
Over the years, the investment division has gradually expanded into a collaborative GP mode of operation.
partnership
One of the themes that emerged during the team’s discussions with Victor Fang a few years ago was the issue of food safety in China, which resulted in Fang Investment Management expanding into the food sector, partnering with China Resources and Investcorp to set up a private equity fund, the Asia Food Growth Fund.
The Asia Food Growth Fund had its first close of $275 million in early 2020. The fund is primarily focused on growth opportunities in Asia’s fragmented food and beverage sector.
As China becomes increasingly urbanized, the demand from millions of households for safe, commercial-scale industrial production of food is also growing rapidly.
According to the National Bureau of Statistics of China, revenue from China’s food and beverage industry is expected to reach 5.29 trillion yuan ($730.5 billion) in 2023, up 20.4% from 2022.
The fund’s portfolio companies include Chinese instant food brand Mo Xiaoxian, China and Southeast Asian instant cereal and coffee maker Viz Branz, Hong Kong food retail chain City Super Group and Hong Kong-headquartered condiment and sauce buy-and-build platform Heritage Foods.
Fung Investment Management’s relationship with Investcorp also allows the family office to act as a bridge between Asian investors and Middle Eastern and international investors looking to exchange investment opportunities, something that has attracted a lot of interest recently amid geopolitical developments between China and the Middle East, Zi said.
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