KKR & Co. L.P.
KKR, CDH, Modern Dairy Partner to Build Large Scale Farms in Shandong Province
US$140 Million Investment to Boost Premium Milk Production
BEIJING & HONG KONG--(BUSINESS WIRE)--
KKR, CDH and Modern Dairy today announced the formation of a new joint
venture designed to deliver premium raw milk to Chinese consumers. Under
the terms of the agreement, KKR, CDH and Modern Dairy will invest US$140
million over the next 18 months to build two new large-scale dairy farms
KKR and CDH have previously invested in Modern Dairy in 2008. Since
then, Modern Dairy has grown its herd from 24,000 dairy cows and three
farms to approximately 180,000 dairy cows and 22 farms. In 2010, Modern
Dairy completed an IPO on the Hong Kong Stock Exchange.
"The growing demand for premium dairy products is driving strong demand
for high quality milk from large scale farms," said Gao Lina, CEO of
Modern Dairy. "Following our successful partnership in Modern Dairy, 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," added Madam
David Liu, Member of KKR and Head of KKR China said: "The management of
Modern Dairy saw a need arising from increasing demand for safer and
healthier milk. The solution was large-scale dairy farm that
incorporated global best practices. Today, food safety remains a top
priority and this new investment helps increase the supply of premium
raw milk in China."
According to Euromonitor, China's total dairy consumption grew at 10%
CAGR over the past five years, with premium dairy product consumption
growing significantly faster than the overall market and increasing its
market share from 10% to 19%, due to continued consumer concerns with
food safety and increasing health awareness. Despite the strong growth,
China's per capita liquid milk consumption is less than 10kg per year,
compared to 32 kg in Japan and 78kg in the United States.
Julian Wolhardt, Member of KKR, said: "We had a successful investment
previously with Modern Dairy. With this new joint venture, we are
following a successful model to work with an experienced local
management team, using our capital, global resources and the operational
value-add KKR brings to the partnership to help meet the growing demand."
The new joint venture plans to build two 10,000 cow farms over a
two-year period. The farms will be located in Shanghe county of Eastern
China's Shandong province, which has suitable climate conditions for
dairy farming and strong support from the local government. KKR, CDH and
Modern Dairy will hold 61.5%, 20.5% and 18.0% stakes respectively.
The new joint venture farms will buy Modern Dairy's excess cows
generated through natural herd growth. There is also an arrangement for
Modern Dairy to buy back the JV farms in three years, which will boost
its long term growth.
The transaction is subject to customary approvals and is expected to
close in the fourth quarter. KKR will be making the new investment
through its China Growth Fund.
About Modern Dairy
Headquartered in China's eastern province of Anhui, Modern Dairy's
primary business is raising dairy cows and selling raw milk to branded
dairy companies for processing into consumer dairy products. Modern
Dairy was founded in 2005 and built its first farm in Ma'anshan in 2006.
On November 26, 2010, Modern Dairy was successfully listed in Hong Kong
Stock Exchange as China's first listed dairy farming company. After 8
years' development, Modern Dairy has become the largest dairy farming
company in China, operating 22 dairy farms in Anhui, Heilongjiang,
Hebei, Shandong, Shaanxi, Sichuan, Inner Mongolia, and Hubei provinces
with total herd size of 180,000 cows, daily raw milk production of over
2,000 tons and total production capacity of over 700,000 tons of raw
milk per year.
Founded in 1976 by Henry
Kravis and George
Roberts, KKR is a leading global investment firm with $83.5 billion
in assets under management as of June 30, 2013. With 18 offices around
the world, including in Beijing, KKR manages assets through a variety of
investment funds and accounts covering multiple asset classes. Since
inception, KKR has completed multiple private equity investments with a
total transaction value in excess of $430 billion and the portfolio
companies in the firm's private equity funds have over $200 billion of
annual revenues and more than 900,000 employees. KKR seeks to create
value in its private equity investments by working as a partner with
management and bringing global resources and operational expertise to
its portfolio companies. KKR invests in high-quality franchises across
multiple industries and geographies. KKR & Co. L.P. is publicly traded
on the New York Stock Exchange (NYSE:KKR), and "KKR," as used in this
release, includes its subsidiaries, their managed investment funds and
accounts, and/or their affiliated investment vehicles, as appropriate.
For additional information and a list of KKR investments, please visit
KKR's website at www.kkr.com.
Founded in 2002, CDH Investments is an international alternative asset
fund manager focusing on investments in private equity, venture capital,
real estate and public equity markets. CDH Investments manages over
US$10 billion from more than 100 international and domestic
institutional investors, including sovereign wealth funds, China's
National Social Security, international pension funds, endowments,
family offices and fund of funds. It also manages investments from both
domestic and international high net worth individuals. CDH Investments
has more than 70 investment and other professionals operating in offices
in Hong Kong, Beijing, Shanghai, Singapore, Shenzhen, Jakarta and Ho Chi
Key Media Contacts:
Amy Xiao, +852
Wonderful Sky Financial Group
Seng Chan, +852 2894 6314
Hill+Knowlton Strategies Asia (for KKR
Feng, +8610 6580 9510
New Alliance Consulting International (for
R. Okun, +65 6922 5800
Huller, +1 212 230 9722
KKR (New York)
Wen, +86 10 6581 8388
Source: Kohlberg Kravis Roberts & Co. L.P.
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