Two Trees Capital, the Singapore-based single family office of the Genting Group, has been making strategic investments in agri-food and healthcare companies.
“Agri-food and healthcare are enduring themes essential for our existence. While companies come and go with each economic cycle, being able to identify and invest strategically in those that could withstand and grow through each down cycle will help to compound the group’s overall success in the long run,” Xuan Feng Ong, senior investment manager at Singapore-based single-family office Two Trees Capital, said in an exclusive interview with AsianInvestor.
“We ultimately strive to build enduring businesses in enduring sectors.”
Asia is set to experience a seismic shift in food trends over the next decade and requires total investment of $1.55 trillion in related sectors by 2030, a report by Temasek, PwC, and Rabobank suggests.
Asia is also primed for a rapid healthcare change post Covid-19. McKinsey estimates that digital health in Asia could create $100 billion in value by 2025, up from $30 billion in 2020.
APPROACH TO INVEST
“We prefer to build upon the unfair advantage that our group’s ecosystem provides – both to de-risk and ensure greater success in any of our investments,” Ong said elaborating on the investment approach the family office takes.
“As such, we naturally gravitate towards areas we have business moats in -- agri-tech for oil palm and synergistic F&B (food and beverage) concepts in countries where we operate.”
Malaysian conglomerate Genting’s top food and beverage businesses are primarily in Asia and the United States.
The group is currently interested in strategically designed dining experiences, integrated with the group’s entertainment and hospitality offerings, for the overall guest experience and alignment with their branding.
Ong highlighted the extreme importance of data in all investments that are made by the family office in the agri-food-tech and healthcare industries.
“If you can access and make sense of confidential and quality trial data, by tapping on experts within your means, you would have an unfair advantage. Without it, we are no better than punters.”
Two Trees Capital leverages a team of in-house scientists within the group that conduct trials to test the claims of a product or solution.
On trends in the agri-food and healthcare industry, Ong said: “Price hikes here will be much steeper than ever before due to the combination of antagonising factors affecting production, geopolitics, and global economics.”
“There will be more challenges relating to access to food and healthcare,” he added.
A September 2022 paper by IMF supports this view, concluding that prices for food staples and fertilisers have been on the rise since 2018 and have been exacerbated by the Russian invasion of Ukraine in 2022.
A “multitude of factors… including conflict, climate shocks, and the impact of the COVID-19 pandemic. These combined impacts have driven up food prices and negatively affected food production and distribution,” the IMF said.
As for healthcare, widespread inflation and increasing healthcare-use are combining to drive projected increases in global healthcare benefit costs to their highest level in nearly 15 years, according to a survey of global medical insurers conducted by Willis Tower Watson.
“Biomaterials that can be scaled up to replace existing unsustainable materials and accelerated selective breeding aided by new computational technology”, are two specific trends that Ong thought investors should keep an eye on.
Biomaterials are derived from or inspired by biological sources, such as plants, animals, or microorganisms.
CHALLENGES AND SUPPORT
Ong also warned against making “feel good” investments in food sustainability and healthcare.
“It’s extremely important to truly comprehend the science and data supporting the new technology and solutions in this space. Bad investments when compounded, albeit with good intentions, create an unhealthy ecosystem that allows bad companies and actors to thrive.”
As an asset owner looking closely at innovations in these two domains, he prefers to work with “startups that are nimble and more open to collaborating with bigger players to accelerate the solution/product development process.”
Collaboration between asset owners, government agencies, and national universities can significantly enhance the agri-food and healthcare sectors.
Ong suggested a proactive approach based on two points.
“Firstly, the right of first access to public-private partnership projects,” Ong said, referring to investments where asset owners can be given priority to explore collaboration and invest in healthcare and agrifood projects with government agencies.
Secondly, Ong referred to “technology transfers,” whereby asset owners collaborate with governments and universities to access and translate cutting-edge technologies through business-friendly technology transfer agreements, and facilitating the commercialising of new intellectual property.
AsianInvestor will be hosting its Family Office Briefing in Hong Kong on November 28. For more details, click here.