According to reports in local media, Kohlberg Kravis Roberts & Co., a private equity firm, has announced plans to invest about USD300 million in China's milk industry.
The report said the investment would be realized through USD100 million equity capital and USD200 million debt financing from Chinese banks. So far, KKR has not revealed that which Chinese milk company will become its partner and the transaction will be formally announced later this month.
Chen Yu, an expert in the milk industry, said that at present venture capitalists from the United States and Europe are paying close attention to China's milk industry. About USD5 billion of capital will be put into the agriculture investment field in the country. In the current market condition, agriculture is a better investment project compared with other industries, since the risk in this sector is relatively small. In the agricultural industry, dairy farming has the greatest development potential. For these reasons, foreign venture capital firms are expected to enter China's dairy industry in the near future.
Chen said the large capital injection will benefit the consolidation and development of China's dairy industry. In addition, more potential dairy brands from second-tier Chinese cities may gain venture capital in the future.