CDH commits $22m to China’s Zhongding Dairy Farming

Founded in May 2013, Zhongding Dairy has positioned itself as an industry consolidator. It manages 32 farms in northern China, which have 25,000 dairy cows. The group produces 260 tons of fresh milk each day, supplying to dairy products companies such as China Mengniu Dairy, Inner Mongolia Yili Industrial Group and Bright Dairy.

"Zhongding's business model is different from other previous investments in the dairy industry," Zheyu Wang, managing director at CDH, told a press conference. "Regardless of building new farms, Zhongding focuses on improving business management and quality control of its farms."

The company plans to use at least RMB500 million to consolidate 100 small-scale dairy farms by the end of this year, with over 100,000 cows.

Over 70% of dairy farms in China are classified as small scale in that each owns fewer than 1,000 cows.

CDH and KKR invested in China Modern Dairy in 2008 following a tainted milk scandal that cost lives of six children and hospitalized hundreds more. Both investors reduced their holdings when the company went public in 2010 and again in May 2013 when Mengniu increased its stake. They have now fully exited.

In 2013, KKR, CDH and China Modern Dairy teamed up to invest in a $140 million greenfield farming joint venture - Asia Dairy - intended to meet China's rising demand for premium milk products.

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• Topics
• Greater China
• Consumer
• Expansion
• China
• CDH Investments Management
• Consumer
• Growth capital