KKR eyes $100m Chinese dairy deal

The private equity firm may back a dairy business that has been linked to a milk scandal in China. The scandal resulted in the deaths of four infants, and the illness of more than 50,000 people after dairy products were found to be contaminated.

Kolberg Kravis Roberts is planning to invest $100 million (€78 million) into a start-up dairy business called Mengnui Modern Farm in China later this month. The company has been linked to China Mengnui Dairy, which has seen its shares drop since media reports have linked it to a milk scandal in China.

A source said that the investment is opportune for China because its government is looking to modernise its agricultural industries.

The milk scandal involves 22 Chinese dairy firms, which sold produce containing an industrial chemical called melamine. The chemical is alleged to have been added to milk in order to cheat nutrition tests. Four infants died and more than 50,000 people fell ill after consuming contaminated dairy products.

China Mengniu Dairy is one of the biggest firms implicated in the milk scandal, and media reports have said the company has a stake in Mengnui Modern Farm, although the details have not been disclosed.

David Liu, head of KKR’s Greater China operations, was involved in investment in Mengniu Dairy in a former role at JPMorgan Private Equity, now Metalmark Capital.

KKR, which has managed committed capital of more than $59.9 billion since its founding in 1976, is currently managing a portfolio of more than fifty companies.