Sequoia Capital acquires stake in Chinese dairy company Junlebao for US$171m

CHINA – Sequoia Capital China, a Beijing-based investment management firm, has invested 1.2 billion yuan for a 15.26% stake in dairy products company, Shijiazhuang Junlebao Dairy.

The investment makes Sequoia Capital the largest institutional shareholder in the Shijiazhuang-based dairy company. Sequoia said that the strategic investment in Junlebao will help to drive growth in the company at a national scale.

Since its establishment in 1995, Junlebao Dairy successfully grown into becoming one of the leading dairy companies in China through innovation-driven high-quality development strategies.

In 2019, the sales of Junlebao Dairy Group increased by 25% year-on-year, ranking first among large-scale dairy companies. Among them, the low-temperature yogurt grew against the trend, and the industry’s growth rate was the first.

The company has also significantly expanded its milk powder brand having reached 75,000 tons in 2019 and becoming the leading brand in national sales, with an average annual compound growth rate of 84.5%.

The brand now stands out from large-scale brands. According to the company, the brand has experienced a ten-fold growth rate in the industry, becoming one of the fastest growing in the global market.

Junlebao milk powder recently passed the dual certification of the European Union, becoming the first milk powder brand in China to obtain BRC and IFS certification, and the first in the industry to pass the BRC A + top certification.

In addition, the Junlebao brand of infant milk powder has overturned the industry structure and driven domestic milk powder market.

In the next five years, Junlebao Dairy Group has unveiled ambitious plans aiming at positioning the company as the country’s number 1 market leader in low-temperature yogurt, and become a global leader in infant milk powder.

Junlebao Dairy is now poised to leverage Sequoia’s investment strategy of the whole chain and the entire cycle including support on digital construction, brand building, organizational construction and systematic post-investment value-added services.

Guo Zhenwei, Director of Junlebao and Managing Director of Sequoia China, says that the dairy products are a pillar industry of the nation and believes there is still huge room for development in the future.

“Junlebao has been in the industry for more than 20 years and has become an industry leading brand,” Zhenwei said.

“Behind the rapid rise of Junlebao, we rely on the management team led by the founder Wei Lihua, long-term adherence to quality, innovation and social responsibility.

“We are very happy to be their strategic partners and will fully mobilize Sequoia’s resources and capabilities in technology empowerment, brand building and other aspects to help the sustainable development of the enterprise.”

Junlebao Dairy currently operates 20 manufacturing plants and 13 modern large-scale ranches in China and also holds a 65% stake in Banner Dairy after the company acquired an additional 43.41% for RMB357.5mn in July 2018.

In November last year, Mengniu Dairy, China’s leading dairy firm sold its 51% in Junlebao Dairy to Ping An Capital together with Chinese global investment firm, Primavera Capital Group and corporate management firm, Junqian Management for or 4 billion yuan (US$568 million).

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