Singapore-headquartered agribusiness company Japfa Ltd (Japfa Group) is considering divesting its entire 100 per cent stake in Indonesian milk processing and distribution company PT Greenfields Indonesia, three sources familiar with the matter told DealStreetAsia.
The company has initiated the stake sale process and has mandated Credit Suisse as the sell-side advisor. Japfa is said to be seeking more than 20x of EBITDA valuation for Greenfields Indonesia, said one of the sources mentioned above.
As part of the process, Japfa is understood to have made approaches to several milk producers in Indonesia as well as some local conglomerates to gauge interest. However, the parties have not reached an agreement so far.
DealStreetAsia has reached out to Japfa Group seeking comments on the development.
Previously, the group held its stake in Greenfields Indonesia through its subsidiary, AustAsia Holdings Pte Ltd. Following a restructuring in April this year, Greenfields Indonesia was transferred under AustAsia Food Pte Ltd, the group’s holding company for the dairy downstream business, according to an earlier announcement by Japfa Group.
Japfa claims Greenfields is a market leader in Indonesia in the fresh pasteurized milk category in terms of sales volume, per the group’s 2019 annual report. Its other products include yogurt, UHT milk, Jersey milk, cheese and whipping cream.
Greenfields fresh milk market share in Indonesia is around 45 per cent while its yogurt products have a 38 per cent market share, per the company’s corporate presentation material as of May 2020.
For Greenfields, cafes and coffee chains account for a major part of its sales while the company also sells its products through retail chains. However, due to the COVID-19 pandemic, its sales through the cafe segment has seen a sharp decline in Indonesia, according to the sources.
On the retail side, other significant dairy brands include Cimory, part of Cimory Group that was once backed by Creador PE; Diamond milk, the product of PT Sukanda Djaya; Indomilk, the brand of PT Indolakto that is part of Salim Group; as well as Milk Life, from the stable of PT Global Dairi Alami that is part of Djarum Group.
“Greenfields’s products are at the premium price point so they compete with Milk Life while Cimory, Diamond and Indomilk dominate the lower price level,” the source said.
Japfa Group also markets Greenfields milk in other countries including China.
Japfa Group’s dairy division clocked total revenue of $244.5 million in 1H of 2020. The dairy division also reported $3.9 million of operating profit and $51.3 million of EBITDA in the same period.
The company’s raw milk sales volume in China was 273.9 million kilograms and 18.3 million liters in Southeast Asia in the first half of this year.
Earlier in July 2020, Japfa Group sold 25 per cent stake in AustAsia Holdings, which manages its dairy farming and beef feedlot operations in China, to Japan’s Meiji Co Ltd, for $254.4 million.
Japfa Group has a network of modern farming, processing and distribution facilities in Indonesia, China, Vietnam, India and Myanmar. The company specialises in producing dairy, protein staples from poultry, beef, swine and aquaculture, as well as packaged food.