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Carlyle Group invests in Yashili China’s milk powder maker

By Amarendra Bhushan for CEOWORLD Magazine Updated:September 21, 2009

Global private equity firm, The Carlyle Group had bought a minority stake in Yashili to help the leading Chinese infant formula maker improve its research and production.

The US Carlyle Group has taken a 17.3% stake in Yashili, a family-owned company which is among the three top national producers of infant milk formula.

The investment was made through Carlyle Asia Partners, a fund which typically spends $100m-$200m on individual deals.

The Carlyle Group is one of the largest private equity firms in Asia with the broadest local presence across the region. CAP is the largest international private equity investor in Taiwan, dating back to its investment in TBC in 1999 when there was no integrated cable operator in Taiwan. During its holding of TBC, the company had expanded its coverage across Taiwan and significantly enlarged its scale and revenue.

Carlyle’s deal came after rivals including Kohlberg Kravis Roberts & Co, Sequoia Capital and other funds invested more than $1 billion combined in China’s domestic dairy industry, which was badly hit by a food safety scandal last year.

Hopu Investment Management Co., a US$2.5 billion fund set up by top China deal maker Fang Fenglei, teamed up with a local investment firm to buy a 20% stake in China Mengniu Dairy Co. for $800 million in July.

Carlyle said that as part of its agreement, it will help strengthen Yashili’s management expertise and research-and-development capabilities. It also plans to create a world-class quality-control system.

“The infant-formula market in China is undergoing a positive transformation and is set to continue its strong growth trend,” said Patrick Siewert, senior director of Carlyle Asia Partners.

Yashili is one of China’s biggest baby-formula makers. It was established in 1983 and is headquartered in Guangdong province, wsj reported.

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