KKR & Co. (KKR), the private equity firm run by billionaires Henry Kravis and George Roberts, led a group that agreed to buy a stake in a meat-processing unit of China’s Cofco Group for $270 million, a person with knowledge of the matter said.
KKR is paying $150 million for its shares in Cofco Meat Investment Co., the person said, asking not to be identified because the terms haven’t been disclosed. Baring Private Equity Asia, Hopu Investment Management Co. and Boyu Capital are the other investors, according to a statement released by the firms today. Steve Okun, a Singapore-based KKR spokesman, declined to comment.
The transaction would be KKR’s third investment in China related to food safety after it bought holdings in Ma Anshan Modern Farming Co. and Asia Dairy Holdings. China’s government has pledged to enhance food quality following a series of scandals linked to melamine-laced baby formula and rat meat sold as mutton.
Cofco Meat, one of the largest hog producers in China, has large-scale operations that help “to produce high-quality meat products to address increasing food safety issues,” according to the statement. It didn’t specify the size of the stake purchased by KKR and its fellow investors.
The expansion in China’s hog production is putting more demand for oversight on the industry as demand for meat surges. The country accounts for more than 50 percent of global pork consumption, according to data in today’s statement.
Chinese authorities in March pulled 131 dead pigs from a river that provides drinking water to the eastern city of Nanchang, prompting new health concerns a year after thousands of dead hogs were found in a Shanghai waterway.
KKR and the other investors aim to boost the size of Cofco Meat’s hog and poultry farm by fivefold within seven years, the person said.
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