Japfa is selling 5% in its China-based milk subsidiary for US$58.4 million ($78.5 million), to boost its position as the country’s largest independent raw milk producer.

The transaction values AustAsia Investment Holdings, as this subsidiary is called, at US$1.17 billion.

The buyer, New Hope, is also in the agri-food industry, and will be yet another downstream player to buy from AustAsia.

There are other strategic investors in AustAsia before New Hope. In July 2020, Meiji took a 25% stake in AustAsia. More recently, on August 30 2021, Genki Forest and Honest Dairy took stakes of 5% and 2.5% respectively.

Upon completion of the New Hope transaction, Japfa will still hold a 62.5% stake in AustAsia, which runs 10 dairy farms in China and in 2020, its average milk yields were 40.1kg per head per day with a total of around 100,000 heads of cattle.

The US$146 million from these three investors will be used by Japfa for general working capital and corporate purposes.

“We are teaming up with a leading Chinese agri-food group that shares our growth ambitions and our focus on quality and innovation,” says Japfa’s CEO Tan Yong Nang.

“We look forward to working together with all our partners to further grow AustAsia and create long term value,” he adds.

Japfa shares closed Sept 7 at 72 cents, up 2.13% for the day but down 21.74% year to date