China’s thirst for milk continues to draw private equity firms. This week, Chinese milk producer Huaxia Dairy became the latest.
Investors including Olympus Capital Asia and sovereign wealth fund the Government of Singapore Investment Corp. pumped $106 million into Huaxia Dairy as part of a Series D round, or fourth round of institutional money, for the firm. Those funds will largely help Sanhe-based Huaxia Dairy build more farms in China and buy more heifers, Peter Cimmet, a managing director at Olympus Capital Asia and a board member at Huaxia Dairy, said.
Olympus Capital Asia and GIC’s investment in Huaxia is the latest in a string of such investments.
Last month, Yunfeng Capital, a private equity firm co-founded by Alibaba Group Holding Executive Chairman Jack Ma, and Citic Private Equity, bought into a unit of dairy products manufacturer and seller Inner Mongolia Yili Industrial Group Co. The private equity firms bought shares in the unit worth at least 2 billion yuan ($320 million), that would give them a combined 60% stake.
In February, Hong Kong-based private equity firm RRJ Capital said it would invest 1.5 billion yuan into Shanghai Bright Holstan, a dairy farming joint venture with Shanghai-listed Bright Dairy & Food, a subsidiary of Chinese conglomerate Bright Food Group, as consumer demand for milk and other dairy products including ice-cream, cheese and yoghurt rise rapidly.
Bright Dairy was in the headlines two years ago when it bought U.K. cereal maker Weetabix.
One of private equity’s earliest and most well known investments into the dairy sector was secured by CDH Investments and KKR & Co., when they jointly acquired a 45% stake in China Modern Dairy 1117.HK +0.63% in 2008, and saw partial exits when China’s largest dairy producer China Mengniu bought into Modern Dairy last year.
Source: WSJ