18th Jun 2007 07:57
London Asia Chinese Private Equity18 June 2007 18 June 2007 London Asia Chinese Private Equity Fund Limited ("LACPEF" or "the Fund") Investment in Eco-friendly Pesticides Business LACPEF, the China focused investment fund, has invested £2.7 million for a 25%stake in Hainan Zhengye Zhongnong High-tech Co., Ltd (the "Company" or "HNZY").HNZY develops, produces and sells environmentally friendly pesticides andfungicides. The Company has also developed a hybrid corn seed for the Chineseagriculture industry. HNZY markets its products through over 130 staff and a well established salesnetwork of 3,300 product sales and services centres, covering all major farmingareas in 28 of China's provinces. With the increasing trend to replaceconventional toxic pesticides with more environmentally friendly solutions, HNZYis well positioned to exploit this fast growing market. The Company, which intends to export its products to other developing countries,is planning to list on the Shenzhen Stock Exchange and has already appointed oneof the top ten securities houses in China as the underwriter. HNZY was established in 1998. By 2001, HNZY was conferred the award of 'LeadingAgricultural Chemical Enterprise' in Hainan. In 2005, the hybrid corn seedresearch was designated as part of China's prestigious 'National Torch Plan'Program. In 2006, Hainan Province Marine Organism Agricultural Chemical ProjectTechnology Research Centre was established by HNZY to further R&D in marineorganism agricultural chemicals. Eco-friendly pesticide and fungicide products typically sell at a much highermargin than conventional pesticides due to increasing concern regarding food andpesticide safety. HNZY provides its pesticide and fungicide control solutionswith an environment-friendly delivery system, which minimizes residual toxicitywhile delivering equal, if not better, performance compared with conventionalchemical pesticides. In addition to its pesticide and fungicide product range, the Company has alsodeveloped two hybrid corn products, which are already registered with theMinistry of Agriculture. The first, 'High Oil Corn', contains twice the oil content of other varietiesand is ideal for feeding livestock. HNZY's second product 'Super Sweet Corn' hasbeen developed so that 34% of the corn's content is water soluble sugar,enhancing the flavour. The Company's R&D seed division is continuing to developnew products using its internationally patented high-tech corn hybridtechnology. Simon Littlewood, Director of the Fund, said: "China is a developing countrywith 60-70% of its people engaged in agriculture. With 7% of the world's arableland, China has to feed over 20 per cent of the world's population. Foodsecurity is of high priority and speeding up the development of agriculture isone of the primary tasks of the national economy. HNZY has already developedpatented products for this huge and fast growing market. With an establishedsales and marketing network we believe this is the right time to invest, aheadof a domestic stock market listing." -ends- For further information please visit www.londonasiafunds.com or contact: John West/Andrew Dunn Simon Littlewood Hugh FieldTavistock Communications London Asia Capital plc Collins Stewart Europe LimitedTel: 020 7920 3150 Tel 020 7231 0282 Tel: 020 7523 8000 Notes to Editors The Market for Eco-friendly Pesticide and Fungicide Solutions The growing market for crop protection products is due to rising populations,and the need to maintain a sustainable food production to feed the over 200,000increase per day in the human population worldwide. It took until the early1800's for the human population to hit one billion people, at which point 65% ofthem lived in Asia, and 127 years till the population rose to two billion. Ittook only 12 years for the population to rise from five billion in 1987 to 6billion in 1999, with over 60% in Asia. The UN is predicting an increase tonearly 9 billion by 2050. Currently, loss of crop due to pest is estimated to be US$300 billion annuallyand effectively managing pest threats is vital for better food production. The market for crop protection products in China has been increasing for thepast four years - agricultural production in China increased at a CAGR of 7.6%for the period from 1990 to 2005. China is the largest consumer of pesticidesin the world. High toxicity pesticides' share of the market in China was70%-80%, the use of which has led to pesticide migration, toxin deposit in soiland water tables, resulting in severe damage to the agricultural ecosystem bydecreasing the index of biological diversification and affecting the food chain,impacting on natural predators. The problems of pest resurgence, resistance andtoxin residue deposits have become even more serious. Consequently, pest controltoday confronts increasing challenges of more resistant and numerous pests,leading to stronger dosages and increased costs. At present, demand for biopesticide products is around 2-3% market share ofagricultural chemicals. Within the next ten years, biopesticide products areestimated to take a market share exceeding 20% of agricultural chemicals.Drivers of demand for biopesticide products include environmental and healthconcerns arising from the use of conventional pesticides and the high costsassociated with disposing of obsolete pesticides. The biopesticide products andeco-friendly chemical products industries in China are expected to grow rapidly,due to the advantages the products offer the environment and general health andChinese government policy requiring replacement of 80% of existing pesticideswith eco-friendly chemical products. Hybrid Corn Seeds China's sales of agricultural products is currently estimated to be RMB 20billion, the second largest in the world and an estimated 9% of global tradingof seeds. China's market for seeds is approximately 12.5 billion tonnes andhybrid corn seeds has been stable at 800 to 900 thousand tonnes per annum. With over two years of experimental cultivation in 165,000 acres of farmland inthree provinces in China (Xinjiang, Inner Mongolia and Hainan), the company isnow preparing to formally introduce its corn seed products by the end of 2007. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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