Kohlberg Kravis Roberts has invested an estimated $150 million of growth capital in Chinese dairy company Mengniu Modern Dairy. The company currently operates seven large farms producing 150,000 tons of raw milk a year. KKR plans to provide dairy farming operations expertise to help it develop world-class facilities and to provide capital to build 20 to 30 more dairy farms. The company was not involved in the tainted milk scandal last year.
The Chinese dairy farming industry is still dominated by small farms. Large scale farms, such as Mengniu Dairy, are not as common as they are in other countries. KKR's strategy of consolidation and providing operational expertise is a common private equity investment strategy, but its application to the dairy industry is new. According to the PitchBook Platform, private equity firms have only invested in one other dairy farm and only 10 companies involved in the production of milk and other dairy goods. The one other dairy farm was Aurora Organic Dairy, which received three rounds of growth financing from Charlesbank Capital Partners.