Olympus Capital leads $50 mln injection into China dairy firm

HONG KONG Thu Nov 1, 2012 6:26am EDT

HONG KONG Nov 1 (Reuters) - Asia buyout firm Olympus Capital is leading an investor group that has injected $50 million to expand China's Huaxia Dairy Farm Ltd, a company that produces the raw milk that is in short supply in China's growing dairy sector, Huaxia said on Thursday.

Foreign investors have been positioning themselves as safer alternatives in China's dairy sector after a lethal baby formula scandal four years ago, but need raw milk to make premium products.

This is the second Olympus-led injection into Huaxia. Last year the firm led a group including European dairy firm Mueller Milch Management that invested $45 million for a minority stake.

Olympus invested $38 million in the latest financing, bringing its total investment in Huaxia to $68 million. Other investors include California Technology Ventures, Herostar Holdings and Grand River Capital.

Earlier this year Danish-Swedish dairy group Arla Foods Amba , said it would buy a 6 percent stake in China Mengniu Dairy Co from private equity firm Hopu for 1.7 billion Danish crowns ($289 million).

Huaxia Dairy said it is completing two new farms and expanding its Wondermilk gelato and yogurt stores in Beijing with five stores planned to be open by the end of the year. (Reporting by Stephen Aldred)

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