Hong Kong-listed Fosun International has entered into a share subscription agreement with Beijing-based dairy firm Sanyuan Foods Co., Ltd. to acquire a 20.45% stake of the company for RMB$2 billion ($325 million), according to a company announcement.
Fosun will subscribe 306 million ordinary A shares at RMB6.53 apiece via its subsidiary Shanghai Pingrun Investment Management and Shanghai Fosun Chuanghong Equity Investment Fund Partnership, Chuanghong Fund.
The subscription has a 36 month lock-up period.
Sanyuan will offer an additional 306 million ordinary A shares to Beijing Capital Agribusiness Group, raising RMB$2 billion, according to an announcement of the company.
Beijing Capital Agribusiness Group, also called Sunlon, was formed in 2009 by merging Beijing Sanyuan Group, Beijing Huadu Group and Beijing Dafa Livestock Corporation with the approval of the Beijing government.
After the transaction, Beijing Capital Agribusiness will hold a total of 35.79% stake of Sanyuan.
Sanyuan says it will use the proceeds to expand the capacity of milk powder.
Shanghai Stock Exchange-listed Sanyuan primarily focuses on production, processing and sale of dairy products.
Private equity firms have been very active in China’s dairy industry lately. Last month, RRJ Capital invested RMB1.5 billion ($250 million) for a 45% stake in a dairy farming joint venture with Shanghai-listed Bright Dairy & Food, and Tiantu Capital Invested US$8.25M In Qinghai Xiaoxiniu Biological Dairy.
