Actis Capital LLP, Morgan Stanley and Goldman Sachs Group Inc have made a US$73 million investment in Hunan Taizinai Group (
The three foreign firms purchased preferred shares equivalent to a combined stake of about one-third in Hunan Taizinai, said Yao Xin, director of securities and investment at the dairy company.
More than 60 percent of the firm's equity will remain in the hands of company chairman Li Tuchun (
China's demand for dairy products more than doubled to 23 million tonnes in the five years to 2005, spurred by rising incomes, increased health awareness and expanding retail chains.
"The three are betting on the huge potential of China's dairy industry," said Yang Lei, a Shanghai-based analyst at ABN Amro Holding NV. "Buying into a smaller, regional player like Taizinai gives them a good way in. Few buying opportunities are left with top-tier players."
London-based buyout firm Actis, which is also an investor in China Mengniu Dairy Co (
Morgan Stanley invested US$18 million and Goldman Sachs US$15 million in the firm, he added.
Hunan Taizinai, which received more than 10 bids for the stake, plans to use funds raised from the sale to finance two processing sites it is building in Kunshan and Chengdu, Yao said.
The investment will also boost Taizinai's plans this year to increase market share in the more affluent cities of Beijing, Shanghai and Guangzhou, he said.
Hunan Taizinai, based in Hunan Province, plans to sell shares in Hong Kong or New York sometime this year, Yao said, without providing details.
NYSE Group Inc chief executive John Thain met with Taizinai management last month to discuss a potential New York share sale by the company, said Michael Yang, Asia Pacific executive director of the US bourse in Beijing yesterday.
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