Private Equity Giant KKR Bets on Growing Aquaculture Industry with China Fish Feed Investment

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Private equity behemoth KKR has invested into Chinese fish feed company Yuehai Feed Group through its China Growth Fund. Yuehai company produces food and nutrition for shrimp and seawater aquaculture operations.

Global aquaculture — or fish farming — is rapidly gathering pace as an industry and already represented 43 percent of total fish production in 2013, according to the Food and Agriculture Organization (FAO).

Yuehai will use the funds to expand its operations to help meet demand from the world’s largest fish production market; China represented 62 percent of the total fish production market in 2013, according to FAO, compared to 1 percent in the US.

Fish feed is a particular segment ripe for change as the government imposes stricter regulations around food safety and environmental standards. This includes reducing the use of raw frozen fish as feed and increasing oversight on the use of antibiotics.

As the industry grows in China, aquaculture operators will also look for more nutritious, efficient and advanced feed such as floating puffed feed. Yuehai focuses on the high-end fish feed market, and as a large, industrialized feed producer, the company has full oversight of its feed production process, so is in a good position to react to changes in regulation and customer preferences, according to KKR.

“High-quality feed is critical to ensuring the nutritious value of shrimp and fish and safeguarding them from disease,” said Zheng Shixuan, chairman & CEO of Yuehai in a statement. “Given the strong and rising demand for fishery consumption in China, it is a pivotal time for us to expand and provide healthy aquatic feed to the market.”

Fish feed is also in limited supply, sources tell AgFunderNews, and can’t keep up with the growth in aquaculture, adding to the importance of fish feed production.

This is KKR’s fifth food and agriculture-related investment in China. The firm has invested in Modern Dairy, Asia Dairy, COFCO Meat and Sunner Development, the poultry processing company.

“KKR has maintained a strong commitment to helping address the growing demand for a safer and more secure food supply in China,” said David Liu, co-Head of KKR Asia Private Equity & CEO of KKR China in a statement.

KKR has made other agriculture-related investments too and is one of the leading generalist PE firms for agriculture investment. Other investments include Sundrop Farms, the Australian indoor agriculture project, Afriflora, the African rose producer, and East Bali Cashews, which donated grant funding to in 2013.

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Image credit: Phu Thinh Co on Flickr

— See AgFunder.com for agriculture investment opportunities —

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