RRJ Capital and Bright Dairy in China to list joint dairy venture in 5 years

RRJ Capital, a private equity firm run by former Goldman Sachs partner Richard Ong, and Bright Dairy & Food plan to list their newly formed joint venture within five years, Bright Dairy announced on the Shanghai Stock Exchange website yesterday.

RRJ's unit Chatsworth Asset Holding, Bright Dairy and Shanghai Bright Holstan signed an agreement on Thursday where Chatsworth would inject the equivalent of 1.53 billion yuan in US dollars cash into Holstan for 45 per cent of Holstan, said Bright Dairy. With this agreement, Bright Dairy's stake in Holstan, one of the mainland's biggest dairy service companies, fell to 55 per cent from 100 per cent. Holstan's registered capital will increase to 830.62 million yuan (HK$1.05 billion) from 456.84 million yuan.

"Bright Dairy and [RRJ] will make the utmost effort to start work on the [listing] of Holstan after three financial years and complete the [deal] after five financial years," said Shanghai-listed Bright Dairy, without mentioning the listing venue or the funds to be raised.

If Holstan fails to list within five financial years, RRJ can redeem all or part of its 45 per cent stake in Holstan.

The cash supplied by RRJ will be used by Holstan to build and manage dairy farms. In the next three to five years, Holstan's livestock husbandry business would "greatly increase to over 20 dairy farms from the current 12", with the size of each dairy farm also growing, Bright Dairy said.

The capital injection would resolve the problem of funding the construction of dairy farms and support Bright Dairy's international expansion, it said.