Under the agreement, TPG and Northstar will collectively hold 80% for a consideration of $236m and Japfa will continue to own 20% of the Southeast Asia branded dairy business, which is a vertically integrated branded dairy products business supported by its own dairy farms. Japfa will continue to support TPG and Northstar in the management of the business.
Japfa’s dairy business, which is operated in China and Southeast Asia, has grown in recent years.
To accelerate the next phase of development of Japfa’s dairy business in Southeast Asia, the company said TPG and Northstar can bring both funding and senior management expertise to further grow the business.
TPG is a global investment firm with approximately $85bn of assets under management, while Northstar is a private equity firm in Southeast Asia, headquartered in Singapore, which manages more than $2.2bn in committed equity capital. With the proposed transaction, Japfa’s senior management will be able to focus on its China dairy business, as well as its other two core business pillars, namely poultry in Indonesia and swine in Vietnam.
Japfa CEO, Tan Yong Nang said, “The Group's dairy business has grown considerably in recent years both in China and Southeast Asia and there is potential for further growth. We are pleased to form this strategic partnership with TPG and Northstar to accelerate the next phase of development in Southeast Asia through their strong track record of developing consumer and retail businesses.
“In retaining a 20% stake in the Southeast Asia business, Japfa will continue to benefit from the upside potential. The proposed transaction along with Japfa’s strategic partnership with Meiji announced earlier this year demonstrate Japfa’s ability to build scalable market leading businesses and unlock significant value for our shareholders. Based on both these strategic partnership transactions, the combined implied equity value of the dairy businesses across China and Southeast Asia is over $1.3bn.”
David Tan, managing director of TPG Capital Asia said, “We are very excited to enter the partnership with Japfa together with Northstar. This is the third recent investment for TPG in the dairy sector and we are delighted to do another investment in Indonesia. We strongly believe that the Greenfields brand and product quality will allow it to continue to grow in consumer appeal. We look forward to helping the business further expand its leading position in the dairy sector and deliver accelerated growth amid the rising consumption in Southeast Asia.”
Sunata Tjiterosampurno, co-chief investment officer of the Northstar Group said, "We believe the trend of increasing consumption of dairy products will continue in Southeast Asia as people become ever more focused on health and wellness. We are pleased to be partnering with TPG and Japfa in Greenfields which is already a market leader in the fresh milk category in Indonesia. Northstar's experience in the consumer space will facilitate the company’s expansion in this fast-growing market."
The closing of the transaction is subject to the satisfaction of conditions precedent including Japfa’s shareholders’ approval.
Japfa’s dairy business in Southeast Asia is vertically integrated from farming to branded dairy products. With a current herd size of more than 16,000 Holstein and Jersey cattle, Japfa’s dairy farm operations is the largest in Indonesia by volume of premium fresh milk produced and sells a range of dairy products including fresh milk, yogurts, UHT milk and premium cheeses under the Greenfields brand.
Greenfields is a leading brand in the fresh pasteurized milk and the stirred yogurt categories in Indonesia. Greenfields products are exported to Southeast Asian countries including Singapore, Malaysia, Brunei, and Myanmar where they can be found at major retailers, leading hotels, restaurants and more.