SMC Capital, Khorchin Rider sign JV agreement

SMC Capital China, a subsidiary of Hong Kong-based Simon Murray Group, signed an agreement on Monday with Khorchin Rider Horse Co Ltd to launch a joint venture.

Khorchin Rider is the largest private company in China's horse breeding industry. The JV aims to develop the company into a global leader in the area.

A rider washes his horse after a race in Ordos, Inner Mongolia autonomous region. SMC Capital China signed a deal with Khorchin Rider Horse to develop the horse industry. [Photo/Xinhua]

The total investment exceeded 120 million yuan ($18.9 million). SMC Capital China injected 60 million yuan in the joint venture - Inner Mongolia Rider Horse Industry Co Ltd - in the first round of the investment.

"The second round of the investment program will be 200 million yuan, and it's likely to happen next year," said San Eng, founding partner of SMC Capital China.

As a private equity firm, SMC Capital China is paying attention to consumption upgrades in the country. The firm believes that China's horse industry has tremendous potential for development.

As a sunrise industry, the recreational horse sector's market size is less than $1 billion in China, but its annual growth rate is more than 20 percent, according to industry statistics and SMC's own research.

"There has been remarkable growth in China's horse industry since the 2008 Beijing Olympics," said Hamilton Ty Tang, managing director of Simon Murray Co Ltd, adding that the number of equestrian clubs increased from less than 100 in 2007 to between 700 and 800 nowadays.

"Our company focuses on three sectors in the horse industry - horse breeding, horse feed and recreational horse clubs," said Lang Lin, founder and chairman of Khorchin Rider Horse, which was established in 2006.

He added that the horse breeding business generates most of the profits, but declined to provide detailed figures.

Compared with domestic rivals, Lang said that in addition to its years of breeding experience and its high-quality management team, the low cost of feeding a horse is one of its biggest advantages.

"For example, the monthly cost for keeping a horse can be between 4,000 yuan and 5,000 yuan in Shanghai, while at Rider, it falls to 1,000 yuan," Lang said, adding that the location of the company, the local government's support and their management techniques make this possible.

"Before we decided to invest in Rider, we conducted a lot of market research and found that many horse industry clubs or companies are losing money, but Rider's performance grew significantly from last year," said Eng.

"Our horse sales doubled this year compared with 2011, which can be seen as an indicator of the industry's development. Also, the industry's boom is connected with China's economic development," Lang said.

"Industries related to people's lifestyle consumption upgrades are growing rapidly in China. After golf and wine investments boomed in the last few years, the horse industry is coming of age in China," said Ren Zhong, investment director of SMC Capital China.

huangying@chinadaily.com.cn