Fonterra to invest in PE-backed Chinese dairy firm

The two companies plan to set up a joint venture to buy Fonterra's Darnum plant in Australia and establish a distribution agreement to sell the New Zealand company's Aumum infant formula brand in China. Fonterra would have a 49% stake in the JV and control production.

"The infant formula market in China is worth about NZ$18 billion today and is expected to be worth NZ$33 billion by 2017," said Theo Spierings, Fonterra chief executive, in a statement."This growth is driven by increasing urbanisation, higher disposable incomes, a preference for premium brands, and relaxation of the one child policy."

Fonterra, which controls about one-third of global dairy exports, already sells its formula milk powder in China. Spierings said the partnership would be a "game changer," providing the New Zealand firm with "a direct line into the infant formula market in China."

Fonterra had a minority stake in Sanlu, one of the Chinese milk producers involved in the melamine scandal in 2008 in which contaminated infant formula resulted in the death of six children while thousands more were hospitalized.

Beingmate has a 10% share of China's infant formula market. According to AVCJ Research, Beingmate raised about $55 million from a group of private equity investors, including CICC Private Equity, Pingan Caizhi Investment Management and CEL Venture Capital.

The investment is subject to regulatory approval.

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• Topics
• Greater China
• Consumer
• Expansion
• Australasia
• China
• Consumer
• Joint Venture
• CICC
• Agriculture
• New Zealand
• Growth capital