(Yicai Global) July 7 -- After introducing an international private equity investor two years ago, Bright Dairy & Food Co.  has now decided to buy back the shares of its dairy cattle raising subsidiary – Shanghai Bright Holstan Co.   

After consultation with RRJ Capital Ltd., an international private fund, Bright Dairy has decided to buy back 45 percent shares of its subsidiary Holstan, with the consideration being about USD315 million, the company said in a statement yesterday.

The statement added that the consideration is a consolidated result of the principal paid by RRJ two years ago and the 10 percent dividend ratio.      

After the deal, the public company Bright Dairy will still hold 55 percent of Holstan's shares, while its wholly-owned subsidiary Bright Dairy International Investment Co. will have the remaining 45 percent, it said. The transaction will help the company strengthen the management of and control over Holstan and prevent the possible high financial costs in the future. 

Due to low international raw milk prices and imported bale-packing raw milk powder, the raw milk price in China has been dropping continuously in recent years; the gross profit rate of up-stream livestock-breeding enterprises hit the bottom, and many companies have even incurred some losses, industry insiders point out. However, as the cow inventories of major milk source countries in the world drop, the international raw milk price has restarted to pick up of late, and the performance of livestock-breeding companies is on the rise, they added.   

In February 2015, RRJ's wholly-owned subsidiary Chatsworth Asset Holding Ltd. invested USD249.2 million in cash in Holstan, with new capital injected following the purchase, it holds 45 percent shares of this joint venture. Bright Dairy holds 55 percent of Holstan's shares by taking all the existing assets of Holstan as investment. 

With cow-breeding experience of over 60 years, Holstan is one the largest companies in China which provides comprehensive services in the dairy cow industry. Audit data shows that, by the end of 2016, total assets of Holstan reached CNY3,95 billion (USD590 million), and the net assets amounted to CNY2,1 billion. It achieved an operating income of CNY3,1 billion last year.