Mekong Capital’s Return to Agriculture: Investing in Husk and the Growing Market for Organic Products in Vietnam

Mekong Capital’s Mekong Enterprise Fund IV (MEF IV) has diversified its portfolio by entering the agricultural sector. The fund recently signed a $5 million investment agreement with Husk, a coal and biofertilizer producer in Southeast Asia. This marked its first foray into agriculture after a two-year hiatus from adding to its portfolio.

Ellen Van, head of the Investment Advisory Team at Mekong Capital, initially had reservations about investing in agriculture. However, she recognized Vietnam’s agricultural prominence with 40% of land devoted to farming and over 70% of the population involved in agriculture. This led the fund to believe in the financial and societal impact opportunities in the agricultural sector.

At the investment agreement signing ceremony, Mr. Chad Ovel, General Director of Mekong Capital, highlighted that Vietnamese agricultural products were being exported as raw materials, missing out on added value. The fund aims to transform Husk into a model agricultural investment with both social impact and financial returns by supporting its expansion and product development into Vietnam.

Husk specializes in biochar and organic carbon-containing fertilizers, using rice husks to produce these products. Their operational model focuses on word-of-mouth marketing through sample farms near distributors, leading to exponential sales growth since 2019. With plans to trade in rice cultivation, coffee, and vegetables, Husk aims to tap into Vietnam’s growing market for organic products as the Ministry of Agriculture and Rural Development targets a 25% increase in organic product registration by 2025.

Mekong Capital’s commitment to Husk signifies its confidence in the agricultural sector’s growth potential in Vietnam. The fund is currently investing in companies like Pharmacity, F88, Vua Nem, Pizza 4P’s while also exploring further opportunities in Vietnam’s thriving business landscape.