GIC, Olympus lead Series D round in China premium dairy play

GIC will contribute to $70 million to the round while Olympus is putting in $30 million. The remainder is coming from other existing shareholders, including Grand River Capital.

This is the third round of investment led by Olympus, which first backed the company with a $30 million Series B round of funding alongside European diary giant Muller in mid-2011. It returned with $50 million Series C round in 2012. Olympus is currently Huaxia's largest single shareholder having invested a total of $108 million.

Peter Cimmet, managing director at Olympus told AVCJ that this latest capital injection will help to company expand operations to Shanghai from its current base in Beijing. The deal, he says, is about more than just food security - a theme which has dominated private equity investment in Chinese food and agriculture to date.

"Food security is certainly a part of it - safety and traceability are particularly important in light of the dairy industry's negative history in China - but Huaxia goes a level beyond that," said Cimmet. "The customers expect safety, and everything is tested from the feed given to the cows to the end product. But beyond that, consumers want milk that is high quality meaning high fat, high protein and a low bacteria count, all of which affects the quality of the end product. "

Set up in 2004, Huaxia Dairy exclusively targets tier-one cities by leveraging pre-existing cold chain infrastructure to deliver fresh, chilled dairy products. It currently operates three farms in the Sanhe area, just outside of Beijing, with over 13,500 cows. The milk produced at Huaxia Dairy is used to supply major dairy companies in China for their premium products, as well as for the production of Huaxia Dairy's own Wondermilk-branded products.

The company is currently building a farm in Xinghua, Jiangsu province, which is due to be completed later this year, bringing the total number of farms to four. Huaxia - which already claims to have one of the best genetic profiles of any dairy herd in China - also plans to import heifers from Australia.

Olympus has made a number of investments in the agri-business space in China but this is its first diary investment. The firm tells AVCJ it is now seeking similar opportunities in other jurisdictions.

"We are looking at dairy investment in other parts of Asia including India and Southeast Asia," said Cimmet. "We will use the expertise we gain in the Huaxia investment and try to look for other ways to invest in diary - it may not always be farming but could be an investment in processing or logistics."

 

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• Topics
• Greater China
• Consumer
• Expansion
• Agriculture
• China
• Consumer
• Olympus Capital Holdings Asia
• Growth capital