CITIC Capital Partners, a China-based private equity fund manager, has agreed to purchase a 100 percent interest in Shenzhen-listed Hunan AVA Holdings’ infant formula and dairy business for about Y570 million ($82 million; €53 million).
Hunan AVA Holdings engages in a variety of activities primarily in the areas of vegetable, cotton and rice seeds, and the production of infant formula and dairy products. The company is restructuring its assets and is looking to focus solely on real estate development. As a result, it is divesting from most other assets, including the diary business.
Dairy industry assets form a major component of Hunan AVA’s business activities and they contributed about 89 percent of the company’s revenues for 2007. The company is dominant in the central and southern regions of China. It produces “Nanshan”, which is among the top 10 infant formula brands in the country.
The infant formula business is growing at a rate of about 20 percent each year in China, CITIC said. It noted that among the major reasons for this rapid growth are the rising disposable incomes in China and the demographic patterns in the country that are changing as a result of an increasing number of working women.
The acquisition will be made through CITIC Capital China Partners, a $425 million fund that makes buyouts and strategic minority investments in Chinese companies. The fund focuses mainly on investments in the manufacturing and consumer products sectors, a company spokeswoman told PEO.
The fund has previously invested in Chinese pharmaceutical company Harbin Pharmaceutical Group and will be closing a few more deals in 2008, she said.
In addition to its China focussed fund, the firm also manages a ¥17 billion ($161 million; €104 million) fund focussed on Japan and two US-focussed funds. It has offices Beijing, Hong Kong, New York, Shanghai and Tokyo.