PAG, Meridian back European dairy company’s China push

PAG and Meridian Capital have invested $225m to take a majority stake in the Food Union Group.

Hong Kong-based buyout firm PAG and Eastern Europe-focused firm Meridian Capital have invested $225 million in Food Union Group, a European dairy producer.

PAG will invest $170 million via its second pan-Asian buyout fund, $3.6 billion PAG Asia Capital II, while Meridian, already an investor in the company, will invest a further $55 million, according to a company statement. Both firms are investing via convertible bonds.

The capital will be used to support the company’s expansion into China, where it is currently constructing two dairy plants that will begin operations in 2018.

Latvia-based Food Union Group is an international group of dairy and ice cream producing companies operating in northern and central eastern Europe. It is the leading milk processing company in Latvia and the largest ice cream manufacturer in the Baltics and Denmark.

Commenting on the deal Weijian Shan, chairman and chief executive officer of PAG, said: “There is a great demand among increasingly affluent and discerning Chinese consumers for high quality protein foods such as those Food Union produces. With its technology, knowhow and capabilities, Food Union is uniquely positioned to deliver what the Chinese market needs.”

Meridian managing partner Askar Alshinbayev added: “Entry into China, which has one of the largest and fastest growing consumer markets in the world, is a significant step for Food Union. We are confident that working alongside with PAG, we can deliver on our strategy to manufacture European quality dairy products which demanding Chinese consumers can enjoy and trust”.

PAG has over $16 billion in assets under management across private equity, real estate and absolute returns strategies.

In addition to Food Union Group, the firm has recently made investments in Singapore restaurant chain Paradise Group Holdings and US printer manufacturer Lexmark International.

Meridian Capital is an international private equity investment group that has made several investments in dairy companies in Russia and the Baltics countries.

Photo from Food Union Group