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Chinese wooed to invest in Pak Food Industry

Fauji
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Fauji Foods Limited (FFL) had announced its appointment of Lazard Saudi Arabia as its foremost financial advisor, Riaz Ahmad & Company as Chartered Accountants and Cheema & Ibrahim as their legal advisor on the Expression of Interest (Eol) they received from Inner Mongolia Yili Industrial Group Co. Ltd for purchasing 51 percent of the company shares.

Inner Mongolia Yili Industrial Group Co. Ltd., a state-owned company in China, is principally involved in the processing, production, and distribution of dairy products and mixed foodstuffs in both China and the world, according to Reuters. The company sells powdered milk, liquid milk ice cream and yogurt alongside dairy tablets; milk tea powder and soybean milk powder.

Inner Mongolia Yili Industrial Group outsourced its operations first in New Zealand by setting up a processing plant in 2014.

Fauji Foods Limited on the other hand processes and offers milk powder, fruit shakes, toned milk, and other food products in Pakistan. Among its more notable products are buttermilk, pasteurized milk, flavored milk, UHT milk, butter, and various refined dairy products, including skimmed and cheeses, UHT cream, and full cream milk powder.

It markets its products under the Nurpur brand. The company was formerly known as Noon Pakistan Limited and changed its name to Fauji Foods Limited in June 2016. Fauji Foods came into ownership of the majority of Noon Pakistan’s shares and invested Rs7 billion in expanding its production capacity from 100,000 liters a day to 600,000 liters a day, according to Bloomberg.

Read more: Pakistan’s massive ‘Meat Industry’ needs overhauling

By late July this year, Inner Mongolia Yili Industrial Group Co (Yili) had already come forth with a willingness to acquire a 51 percent stake in the Fauji Foods. CitiBank had also been appointed as the broker for the acquisition offer submitted by Inner Mongolia Yili Industrial Group.

Yili’s delegation of senior level management–while visiting the head office of FFL– appreciated the state of the art plant of the company and conducted market research on setting up an ice cream and milk powder plant in Pakistan in collaboration with FFL.

Yili had begun as a small dairy-product processing company in Inner Mongolia in 1993.

This transaction between Yili and FFL will be the second major acquisition by a foreign firm in Pakistan’s food sector. Earlier, a Dutch company ‘Royal Friesland Campina NV’ had gained an acquisition of 51% in Engro Foods shares during December of 2016 with an investment of around $460million; the largest private sector takeover by a foreign firm in the country’s history.

Inner Mongolia Yili Industrial Group outsourced its operations first in New Zealand by setting up a processing plant in 2014. It remains one of the largest dairy products manufacturers in Asia and ranks as the eighth largest globally.

Read more: Engro signs to revolutionize Dairy as industry struggles

Yili had begun as a small dairy-product processing company in Inner Mongolia in 1993. Now a dairy giant, Yili has worked with Italian dairy baron; Sterilgarda Alimenti as well as with the European Research and Development Centre in the Netherlands, the first time an overseas entity entertained a Chinese firm.


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