KKR & Co LP had led a joint venture that planned an investment of USD140 million in two large dairy farms in China. This was according to a person with direct information about the venture. KKR planned the return as China's dairy industry became a fast growing sector.
KKR had collaborated again with China's Modern Dairy Holdings Ltd and CDH Investments to establish 10,000 cow farms in two years, said source. CDH is a Chinese private equity firm focusing on partnerships with China's leading management groups.
Previously, both KKR and CDH had invested in Modern Dairy. However, both had decided to sell their stakes out in the company earlier this year. The move was to lock in profit after a five year holding. The new agreement reflected the continued optimism over Chinese demand for high quality dairy products. The agreement also showed that a bigger room was needed as the dairy industry in the country had been continuously growing.
Sales of dairy products in China had been driven by those that are in the middle class and had been expected to double to USD89 billion a year. This was according to a market research conducted by Frost & Sullivan.
The two farms had been set to be established in Shanghe county in China's Shandong province, said source. New York based KKR would hold 61.5% of the venture. Meanwhile, CDH would own 20.5% and Modern Dairy 18%, said source.
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