September 11, 2013

Yili to invest US$50 million in China Huishan Dairy Holdings

In order to secure its milk supply amid government's urge for industry consolidation, Yili Industrial Group has confirmed plans to invest US$50 million in China Huishan Dairy Holdings Co.

China Huishan Dairy Holdings Co is reportedly looking to raise up to US$1.3 billion through an initial public offering (IPO) in Hong Kong.

In a filing with the Shanghai Stock Exchange on Monday (Sep 9), Yili said the investment was part of its management strategy and investment plan and would help strengthen its partnership with Liaoning Huishan and secure long-term and stable milk supplies in Northeast China.

Liaoning Huishan is a leading dairy in north eastern China and it operates 50 ranches, with a dairy cattle herd of 11 million heads.

Song Liang, dairy analyst from Distribution Productivity Promotion Centre, said Huishan can establish a stable supply relationship and enhance its product development and distribution network through the move. He urged the government to further encourage dairy companies in acquisitions and integration by issuing more favourable polices and funds.