Fung Group family office ventures into China food safety
Hong Kong consumer goods and supply chain giant Fung Group’s family office is expanding into new investment areas, such as food safety in China, by transitioning into a co-general partner (GP) investment mode.
“This is a good way to help us expand into new areas without expanding the family office size tremendously,” said Monica Tsui, managing director at Fung Investment Management.
It means the family office will co-manage investment funds with other GPs to expand investment scale.
“We focus on food brands, especially outside of China, which have growth potential in China, as a way to help solve the food safety issues in China,” Tsui told a panel of the HKVCA China Private Equity Summit in Hong Kong last week.
Fung Investment Management is the single-family office of the families of Fung Group chairman Victor Fung and deputy group chairman William Fung, who are the controlling shareholders of the privately held conglomerate. The firm operates across global supply chains for consumer goods, including trading, logistics, distribution, and retail.
The family office’s investment portfolio includes real estate and private equity. It also provides planning and administrative services to the family members.
It is skewed towards alternative investments because of Victor Fung’s interest in the area.
In the past, Fung Investment Management had its in-house investment managers in Europe, the US, and Asia to invest in supply chain and retail-related sectors in the adjacencies of the Fung Group's core operating businesses, according to Tsui.
Over the years, the investment arm gradually expanded into a co-GP mode of operating.
PARTNERING UP
One of the themes that emerged from the team’s discussions with Victor Fung a few years ago was the issue of food safety in China. As a result, Fung Investment Management ventured into the food sector and established private equity fund Asia Food Growth Fund, in partnership with China Resources and Investcorp.
The Asia Food Growth Fund finished its first close in early 2020, at $275 million. It primarily focuses on growth opportunities in Asia’s fragmented food and beverage sector.
As China’s urbanisation continues, the millions of households' demand for safe and commercially scaled industrial production of food is also growing rapidly.
In 2023, the revenues for China’s food and beverage industry reached Rmb5.29 trillion ($730.5 billion), up 20.4% from 2022, according to the National Bureau of Statistics of China.
The fund’s portfolio companies include China’s instant food brand Mo Xiaoxian; China and Southeast Asia’s instant cereal and coffee manufacturer Viz Branz; Hong Kong food retailing chain City Super Group; and Hong Kong-headquartered condiment and sauce buy-and-build platform Heritage Foods.
Because of Fung Investment Management’s relationship with Investcorp, the family office also acts as a bridge between Asian investors, and Middle Eastern and international investors who want to exchange investment opportunities. This has attracted much interest as of late, amid geopolitical developments between China and the Middle East, Tsui said.