PE firm Affinity is Beijing’s new milkman

Private equity firm Affinity Equity Partners acquires a 40% stake in a Chinese dairy business, giving it a share of the biggest milk supplier to Beijing.
China is attempting to rebuild its national dairy industry and wean its citizens off imported milk.
China is attempting to rebuild its national dairy industry and wean its citizens off imported milk.

Private equity firm Affinity Equity Partners has acquired a 40% stake in the largest dairy supplier to Beijing for $123 million, according to a person familiar with the matter.

The deal with Beijing Capital Agribusiness Group CAG comes amid increasing demand for high-quality milk products as China’s middle class expands and demands creamier, fresher milk but, above all, safe food following a national tainted-milk scandal in 2008.

Most of China’s milk is still produced by small-scale farmers that sell to myriad middlemen before reaching consumers meaning quality control is tricky to monitor.

Foreign firms have benefited from Chinese consumers’ flight to big name brands....

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