GIC joins Olympus in China milk deal

The firms will invest $100m in Huaxia Dairy Farm to further fuel its expansion plans.

Olympus Capital Asia has made a follow-on investment in China’s Huaxia Dairy Farm, bringing in the Government of Singapore Investment Corporation and Grand River Capital for the $106 million deal, according to a statement.

Olympus and GIC will invest $30 million and $70 million in the business respectively, with Grand River investing the $6 million balance.

Following the investment Olympus will have injected a total $108 million in Huaxia and is its largest shareholder.

Huaxia Dairy was established in 2004 and currently operates three farms in the Sanhe area of China, just outside of Beijing. With over 13,500 cows, the milk produced at Huaxia Dairy aims to meet international best standards and supplies the major dairy product companies in China.

Huaxia is just one of many milk companies in China to receive investment from private equity, the trend continuing long after the first in a series of tainted milk scandals took place in 2008.

In June, Yunfeng Capital and CITIC Private Equity signed a $320 million agreement to invest in the dairy business of Inner Mongolia Yili Industrial Group, Private Equity International reported earlier. Similarly in February, RRJ Capital proposed a $252 million investment in China’s Bright Dairy.

“We are pleased to have GIC join as a shareholder of Huaxia Dairy. GIC supports the company’s strategy to become the leading premium player in the China dairy market and is an ideal partner to help drive the further expansion of the company,” Peter Cimmet, managing director at Olympus, said in a statement.

Chin Kiong Goh, senior vice president at GIC, added, “We are excited to be an investor in Huaxia Dairy, a leading dairy farming company focused on the premium dairy market in China.  As a long-term value investor, we are confident in the growth prospects of the company.”