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KKR and CDH team up to invest in Chinese dairy farms

24 Sep 2013

cow_bull_170sqPrivate equity major KKR reportedly has plans to invest $140m in two large Chinese dairy farms in a joint venture with peer CDH Investments and China’s Modern Dairy Holdings.

The joint venture aims to build two 10,000-cow farms over a two-year period, said Reuters, citing a person with direct knowledge of the matter.

KKR will own 61.5 per cent interest in the farms, which will be based in the Shanghe county of the Shandong province, with CDH and Modern Dairy holding 20.5 per cent and 18 per cent respectively.

The two private equity firms backed Modern Dairy in 2008 and floated the business on the Hong Kong stock exchange two years later. KKR and CDH exited their stakes in the business to China Mengniu Dairy earlier this year with KKR receiving a return of three times, according to Reuters reports.

Given KKR’s plans to invest in dairy farms in China its exit from Modern Dairy appears more to do with booking profits and making an exit before launching a new fund rather than exiting an industry it thought would slow, said the report.

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