GIC and Olympus lead dairy farm financing

Chinese dairy producer Huaxia Dairy Farm has received $106m from a consortium of investors in a fundraising round led by GIC and Olympus Capital Asia.

Huaxia Dairy Farm, a Chinese dairy producer based in Sanhe, Hebei province, has raised $106 million from a consortium of investors including Singaporean sovereigh wealth fund GIC.

GIC committed $70 million to the round and was joined by existing shareholder Olympus Capital Asia, the private equity firm, that injected a further $30 million into the company; it now holds a stake worth $108 million and is Huaxia’s largest shareholder.

Other existing investors injected the remaining $6 million including Grand River Capital, the Chinese investment management firm.

“We made our first investment in 2011 by leading the Series B round and we invested again in 2012, leading the Series C round,” Peter Cimmet, managing director at Olympus Capital Asia told Agri Investor.

“China has a shortage of supply for milk, particularly for high-quality milk which is used to make premium dairy products such as chilled yogurt,” he added. “It is a supply/demand situation that favors larger-scale dairy farms.  Plus, demand for premium, chilled dairy products is growing quickly, mainly in Tier 1 cities such as Beijing and Shanghai.”

Olympus Capital has been investing in the agribusiness sector since 1997 but has no plans to increase its agribusiness allocation despite the sector’s promising growth potential.

“Historically, agribusiness has represented a third of our invested capital, dating back to the founding of Olympus in 1997,” said Cimmet. “Going forward, we expect this to remain consistent and for agribusiness to represent about 35 percent of our portfolio.”

Huaxia Dairy was established in 2004 and is in the process of advancing its capabilities to produce more of its raw milk, a product that has risen in demand. The company currently operates three farms in Sanhe, with over 13,500 cows. Huaxia is currently expanding its farming operations with a new farm being built at Xinghua.