Global private equity firm KKR & Co. KKR -2.58% is betting on China’s continued demand for safe milk, announcing Tuesday that it would lead a US$140 million joint venture with Chinese private equity firm CDH Investments and China Modern Dairy Holdings Ltd. to build two dairy farms in the world’s most populous nation.
News of the development of the two farms, which will each be home to 10,000 cows, comes a month after China’s quality watchdog asked importers to recall milk products supplied by New Zealand’s Fonterra Co-Operative Group Ltd.FCG.NZ -1.94% after the dairy exporter warned that some of its products might have been tainted with a substance that could cause severe food poisoning.
It also follows a summer where the infant-formula makers weathered scrutiny from Chinese regulators. Mead Johnson Nutrition Co.’sMJN -0.67% China unit, Abbott LaboratoriesABT -0.48% and Danone SABN.FR +0.10% are being fined for alleged anticompetitive practices. Dumex Baby Food Co., a subsidiary of Danone, is also launching a probe of its infant- formula marketing after China’s state broadcaster alleged the formula maker pays hospital staff to use its products and influence sales.
“The growing demand for premium dairy products is driving strong demand for high quality milk from large scale farms,” Modern Dairy’s Chief Executive Gao Lina said in a statement. “We have chosen once again to partner with KKR and CDH in a new venture to help meet Chinese demand for safe and high quality milk.”
Source: WSJ
