Black Soil founder, Chang Sun, had planned to invest in the northern province of Heilongjiang, where his company bought almost 8,000 acres of rice farming land known for its nutrient-rich black soil.
Chang Sun’s Black Soil postpones raising $1b agri-business fund
by Anirvan Ghosh
The former chairman of private equity firm Warburg Pincus in Asia-Pacific, Chang Sun, has postponed plans for a $1 billion agribusiness fund.
The fund would have been the largest in the agribusiness space in China. It had planned to invest in the northern province of Heilongjiang, where it has bought almost 8,000 acres of rice farming land known for its nutrient-rich black soil.
Sun will instead focus on the operational aspects of Black Soil, his agri-investment company that was raising the fund. He will sign more deals on a case-by-case basis, with the aim of having a good track record.
The agricultural sector in China is highly fragmented, which in turn makes the players inefficient and low in productivity. Most of such players are family-owned, small farms. Sun wants to buy several of those lands on lease, and build large, American-style agricultural farms.
Black Soil has raised between 80- 90 per cent of its 500 million yuan ($76 million) target, from domestic and foreign investors. Further raising will happen after Sun proves that the concept of bigger farms can work in China.
Chinese rules state that agricultural land can be leased for a maximum of 30 years. Villages collectively own small lands, which can be contracted out to individuals. The government has been pushing for larger farms for several years. Cofco, a state-owned firm, has entered consortiums with private equity firms for this purpose.
Black Soil has previously been involved in a state-owned integrated potato processing and distribution company, and a rice producer. In these projects, the firm has helped in improving distribution channels and branding of produce.
