Sequoia China pays $171m for stake in dairy products maker Junlebao

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Sequoia Capital China has completed a strategic investment of over 1.2 billion yuan ($171 million) in Chinese dairy products maker Junlebao to become the firm’s largest institutional shareholder with a 15.26 per cent stake.

“The production of dairy products is a pillar industry closely connected to the daily life of Chinese people. The market still has enormous development potential,” said Guo Zhenwei, managing director of Sequoia Capital China, in a WeChat post on Wednesday.

Guo said that Sequoia China will support the continuous development of Junlebao and the overall Chinese dairy product industry “by leveraging resources and capabilities in technological empowerment, as well as brand building.”

Junlebao, founded in 1995 and fully known as Shijiazhuang Junlebao Dairy, is one of the largest dairy enterprises in China with a production and sales volume of 75,000 tonnes in 2019, representing a compound annual growth rate (CAGR) of 84.5 per cent.

With over 14,000 employees, the company is mainly involved in the production of milk powder, low-temperature yoghurt and milk, as well as animal husbandry. The firm has 20 production plants and 13 modern ranches in Chinese provinces including Hebei, Henan, Jiangsu and Jilin, per its website.

The investment from Sequoia comes roughly four months after Ping An Capital, the investment platform of China’s Ping An Insurance, teamed up with China-based investment companies Primavera Capital Group and Junqian Management to acquire a 51 per cent stake in Junlebao from its parent company, China Mengniu Dairy.

The deal, which should result in the spin-off of Junlebao from Mengniu, was worth a combined 4 billion yuan ($571 million).

Sequoia Capital China maintained that the transaction has made it the largest institutional shareholder of Junlebao when approached by DealStreetAsia. It declined to disclose the sellers in the deal.

Sequoia Capital China, which is widely viewed as a bellwether for Chinese tech investment, primarily invests in companies in the fields of healthcare, technology, consumption & modern service, as well as media & entertainment.

The China-focused division of American venture capital major Sequoia Capital has backed companies like e-commerce giant Alibaba Group, Chinese ubiquitous microblogging platform Sina Weibo, Australia-based payment unicorn Airwallex, and Shenzhen-based DJI, which is the largest consumer drone maker worldwide.

Some of its major investments in the consumption sector include Chinese skincare brand Winona, tea drink chain Heytea, toymaker Pop Mart, and Purcotton, which mainly delivers daily supplies made in natural cotton in China.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.