KKR sells final stake in China Modern Dairy

PUBLISHED : Tuesday, 02 September, 2014, 11:25am
UPDATED : Tuesday, 02 September, 2014, 11:25am

United States private equity firm KKR has sold its remaining stake in China Modern Dairy Holdings, raising about US$80 million, a source with direct knowledge of the matter said.

KKR sold about 168 million shares at HK$3.70 each, compared with Monday’s closing price of HK$3.85, the source said.

China Modern Dairy announced interim after tax profit for the six months to June of 545 million yuan (HK$685 million), an increase of more than three times on the previous year.

KKR confirmed the sale without giving further details.

“We are very proud of the partnership we have had with Modern Dairy since 2007 in supporting their efforts to provide safe and healthy drinking milk to Chinese consumers,” said Julian Wolhardt, a member of KKR.

Wolhardt added that KKR remained a believer in the long-term growth of China’s dairy sector. The New York-based firm is an investor with China Modern Dairy and private equity firm CDH Investment in Asia Dairy, a dairy farm venture established in 2013 to meet China’s rising demand for premium milk products.

KKR and CDH initially bought stakes in China Modern Dairy after the country’s milk industry was battered by a 2008 scandal involving chemical-laced products. KKR paid US$150 million in cash for a 34.5 per cent stake.

After Modern Dairy’s 2010 listing and the sale of a stake to China Mengniu Dairy last year, KKR almost tripled its original investment, it was earlier reported.

China Modern Dairy grew its herd from 24,000 dairy cows and three farms to about 180,000 dairy cows and 22 farms during the five years after KKR and CDH invested.

Citigroup was the bookrunner on the latest transaction.

Citi declined to comment.