Temasek Holdings Invest Millions for Food Start Up

Food Bakery

Temasek Holdings wants to boost Asia's sustainable food and alternative protein industries flourish as consumer demand for green goods increases throughout the world.

Temasek and Singapore's Agency for Technology, Science, and Research will invest more than $30 million in the Food Tech Innovation Centre over the next three years.

The new organization, known as the Asia Sustainable Foods Platform, wants to hasten the commercialization of food-tech businesses across the region by offering operational skills, financial investment, and research and development consultancy services.

Anuj Maheshwari, managing director of investment (agri-food) at Temasek, said on CNBC's "Squawk Box Asia" that the program could encourage more investments in the agritech sector.

Capital is in surplus. Regarding investment in the sector, Maheshwari remarked on Tuesday, "There are impact investors, private equity funds, and venture capitalists. One of the biggest investors in the world is Temasek.

"However, I'm seeing that many family offices want to invest in food and agritech. Deal sizes are expanding, and interest is growing from all around the globe, he added.

According to statistics from the Good Food Institute, worldwide investment in alternative proteins reached $3.1 billion in 2020, more than three times the amount raised the year before. But it's merely a little portion of the whole.

According to a collaborative study by Temasek, PwC, and Rabobank, Asia alone would need to spend more than $1.55 trillion over the next ten years to meet consumer demand for healthier and more environmentally friendly food alternatives.

Since 2013, Temasek has invested nearly $8 billion in agritech, including Impossible Foods, a company that makes plant-based meat substitutes, and Eat Just, a company that makes cell-based protein. Both businesses are now unicorns, or billion-dollar start-ups.

Maheshwari said that the new platform will enable solutions for a wide range of sustainability requirements, including technology to reduce methane emissions, a key contributor to climate change, alternative proteins, and food waste.

He continued by expressing his hope that food regulators will work together to foster more innovation and growth in the field of sustainable foods.

We all have different opinions on food since it affects us all, therefore there can never be just one solution, Maheshwari added.

Safety must always be the first priority, he said, "but regulators also need to allow for the growth of scientific and technological solutions."

EL Development and Sim Lian Jointly develop Food Factory in Mandai to fulfil Demand

Food Vision

Sim Lian Holdings, owned by the Kuik family, and Evan Lim & Co, run by the Lim family, are collaborating to convert two adjacent, deteriorating freehold industrial buildings in Mandai Estate into a 10-story strata ramp-up complex for food companies.

The Business Times has learned that the opening of their joint venture, Food Vision @ Mandai, for sale is planned for the end of the year.

It will have a gross floor area (GFA) that is almost one-third larger than the combined GFA of the two current structures.

The project, which is anticipated to be finished by the end of 2025, will have a total estimated stratum area of 197,937 square feet and include 114 food manufacturing units with sizes ranging from 1,561 to 1,668 square feet and a canteen unit with a size of 1,668 square feet.

On the total 79,175 sq ft freehold land area of the two sites, which will be sold to a joint-venture (JV) business, Food Vision @ Mandai will be built.

The property held by the construction company Evan Lim & Co is being sold for S$45 million, while the building next door, the Chip Tiong Industrial Building at 19 Mandai Estate, is being sold for S$45 million by Chip Tiong Investment, an indirect wholly-owned subsidiary of Sim Lian Holdings.

Because authorisation for such use is often only given on sites classified for Business 2 and comes with strict extra safety requirements, the availability of space for food factories is very restricted. On light industrial/Business 1-zoned properties, a food factory development is often not permitted.

The JV that will build the new complex, Mandai Estate Development, is purchasing both parcels.

Each of the two completely owned subsidiaries of Sim Lian Holdings, Sim Lian Development and EL Development, holds 45% of the JV business. The remaining 10% is owned by Lim Kim Kang Investment, which is run by Evan Lim's brother and nephew.

The owner of the more than 40-year-old Evan Lim Building now uses it as a warehouse. The land is underdeveloped; its present GFA is not nearly half the maximum permitted for the site under the current Master Plan of the Urban Redevelopment Authority. The almost S$3 million development fee that Evan Lim & Co is believed to have paid to the state for the rights to develop the site's untapped GFA is included in the S$45 million transaction price for this property.

On the other side, the GFA of the Chip Tiong Industrial Building is already at the top limit for the location. The seven-story building, which was constructed more than 20 years ago, is empty and slated for removal.

Break-Even Price at Food Vision

Both properties are located on sites with a 2.5 plot ratio and a business 2 zone (ratio of maximum GFA to land area).

A quick calculation reveals that the S$90 million total land price is roughly S$455 per square foot of potential GFA, translating into a breakeven cost for the development of close to S$1,000 per square foot.

According to Tan Boon Leong, at JLL Singapore, the average price per square foot for the strata apartments in the development would be about S$1,300. Similar flats in the Paya Lebar region closer to town are selling for between S$1,600 and S$1,800 per square foot (psf), net strata area excluded. Food Vision @ Mandai's apartments won't have strata vacant areas.

Tan cites a number of characteristics that indicate there is a high demand for freehold strata manufacturing units among both investors and end users.

First of all, there is a greater need for cloud kitchens since home meal delivery has been more popular since the Covid-19 epidemic, particularly during the times when eating out was forbidden or limited. Even though almost all safe-distancing restrictions have been removed, most businesses still allow certain employees to work from home, which increases demand for home meal delivery.

"Spaciousness for food factories is somewhat scarce since permits for such uses are often only issued on Business 2-zoned premises and come with onerous extra safety requirements. Generally speaking, locations that are classified for light industry/Business 1 cannot be developed into a food plant, according to Tan.

"Food industrial space with freehold tenure is very scarce."

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