KKR exits China Modern Dairy

KKR & Co, the global private equity firm, has sold its remaining stake in China Modern Dairy Holdings, raising about $80 million and returning three times on its original investment, according to a source close to the matter.

The stake in the dairy company, some 168 million shares, was sold on the Hong Kong stock exchange for HK$3.70 a share on Monday. This was slightly lower than Monday night’s closing price of $3.85 a share but nearly 30 percent higher than China Modern Dairy’s IPO price of HK$2.89 in 2010.

This is not KKR’s first divestment. The firm sold some 222 million shares of China Modern Dairy at IPO representing roughly a third of the firm’s investment. And last year sold another stake to China Mengniu Dairy Company for HK$2.4billion in a deal that returned the firm 2.9 times on its original investment, according to Private Equity International.

KKR first invested in China Modern Dairy in 2008, investing about $150 million between 2008 and 2009 in a co-investment with CDH, the China-focused private equity firm.

The capital injections enabled China Modern Dairy to expand its operations from a herd of 24,000 dairy cows to one of 180,000 dairy cows. The number of farms under ownership also increased dramatically to 22 from three. from 3 farms to 22 farms.

KKR would not disclose further details of the sale beyond confirming the share sale.

KKR remains invested into other Chinese food producing companies, including the recent acquisition of a $400 million stake in Fujian Sunner, a poultry producer, and a $150 million stake in COFCO Meat, the state-owned meat processor and industrial pig farmer.