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Origo CEO says investment sentiment on the up

LONDON - Origo Sino-India, an Asia-focused private equity group, believes investor sentiment is at its best level for six months, and that emerging market investors are more sheltered from the downturn than those backing western firms.

‘I sense the confidence of UK investors, especially hedge funds, is much better than it was six months ago,’ Origo Sino-India’s Chief Executive Chris Rynning told Reuters in an interview on Wednesday.

‘Investors in China and India have been better insulated from the financial crisis than those backing western firms because the gearing of emerging market investments is much lower so we have seen an improvement in our return potential.’ The AIM-listed fund, which has around 200 million pounds ($329.3 million) worth of investments in 25 pre-IPO Asia-focused companies, has interests in consumer goods-related firms but sees the best returns are coming from Chinese renewable energy, agriculture and cleantech companies.

‘With rising retail and consumer consumption there are plenty of opportunities in China in terms of consumer goods,’ said Rynning.

‘But resources are quite constrained there so if you can take a long-term look at the strategic resources needed to fulfil China’s demand and invest in those specific sectors, which have been largely unexplored by western investors, then you will have a very good return potential.’

Origo, which also manages Origo Resource Partners, a listed natural resources investment fund, sees China as its biggest growth opportunity.

‘I see China as the most attractive investment destination right now. It has plenty of local liquidity, an attractive IPO market with a growth enterprise market due to open in Shenzhen in October and plenty of exit opportunities,’ said Rynning.

Origo recently invested in an Australian farming business to manufacture and export food, such as chicken and beef, to China.

Morgan Stanley Private Equity Asia, Blackstone Group and Rabobank have all set up Asia-focused agriculture investment funds in the last year.

‘With urbanisation at the rate it is in China it has left farmland and water as constrained resources so we will export food there from Australia because the Chinese diet is changing and they want to eat safer and better,’ said Rynning.

Origo plans to maintain its focus on China and India but has recently widened its mandate to invest in companies outside of its two main markets whose demand are driven by the Chinese and Indian economies.

‘China and India have a combined population of 2.3 billion people and with consumer demand still rising we see a huge spectrum of opportunity for us,’ said Rynning.

Shares in Origo, which have risen in value by 7 percent so far this year, were flat at 15.5 pence by 1235 GMT.