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KKR-led venture to invest in 2 dairy farms
Print Edition
KKR & Co is leading a joint venture with China Modern Dairy Holdings Ltd and a Chinese private equity firm that will invest US$140 million in two large dairy farms to meet rising domestic demand for premium milk products.
KKR’s latest Chinese milk deal comes just as the country is orchestrating an industry consolidation.
The government’s effort stems in part from the 2008 tainted milk powder scandal that killed at least six babies and sickened thousands more.
Modern Dairy, China Mengniu Dairy Co and Inner Mongolia Yili Industrial Group Co are among the Chinese companies expected to eventually hold a dominant share of the milk industry as larger operators seize control of the market and scoop up smaller players.
The joint venture will once again link up New York-based KKR with Modern Dairy. With CDH Investments, a Chinese private equity firm, the companies plan to build two, 10,000-cow farms in Shandong Province over a two-year period.
KKR will hold 61.5 percent of the venture, while CDH will own 20.5 percent and Modern Dairy 18 percent, the companies said in a statement yesterday.
China’s expanding middle class is driving sales of dairy products, which market research firm Frost & Sullivan says will double from the present US$45 billion to US$89 billion through 2017.
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