Sunner and KKR’s new strategic partnership will expand the company’s operations to provide safe chicken products to increasingly discerning Chinese consumers who seek high‐quality meats. The two will partner in supporting the company’s growth by leveraging Sunner’s industry knowledge and specialist expertise with KKR’s global and local agricultural investment experience and network.

 

Sunner is China’s largest breeder, processor and supplier of chicken products, providing fresh and frozen chicken for China’s fast food industry, food manufacturing industry and meat wholesale markets. Through its vertically integrated facilities, Sunner has oversight of the full production chain, ranging from chicken farming to the management of feed mills to processing, which better ensures safe and quality food products and meet high environmental standards.

 

Since the strategic investment was first announced in August 2014, Sunner has strengthened and expanded its premium customer base. It was selected as one of the five local‐market direct suppliers – and the only Chinese supplier – of chicken meat to McDonald’s, which sets one of the industry’s highest standards for food safety and quality. The company has also been recognized as a key model for food safety in China, ranking as a top‐ten food safely enterprise for the fourth consecutive year by the central government’s 12th annual Food Safety Conference.

 

Sunner aims to increase its production volume by 30% in 2015, and more than double its current production capacity to 750 million heads of white feather chicken by 2019. The expansion plan is a testament to Sunner and KKR’s confidence in Chinese consumer demand for high‐quality chicken meat, despite the current chicken price at a cyclical low. To enhance the local supply and demand balance, China has decreased its grandparent chicken imports – the major genetic source of bred white feather chicken for the country – by approximately 30% since 20141. The Company is confident of the business' future profitability under a normalized market cycle.

 

Fu Guangming, Chairman of Sunner, said, “We welcome KKR as a world‐class investor to support Sunner’s growth. KKR has done a number of successful investments in China’s agriculture and food safety space. We believe they will bring great agricultural experience and management expertise to this partnership and together we look forward to enhancing Sunner’s ability to meet China’s demand for healthy chicken products.”

 

“We recognize Sunner’s achievements and growth potential given consumers’ demand for safe chicken in China. We are honored to partner with a company of this caliber and are excited to advance our own commitment in creating a safer and more secure food supply in China,” said David Liu, Member of KKR, Co‐Head of KKR Asia Private Equity and CEO of KKR China.

 

“Sunner’s strong management team, excellent track record and ability to ensure chicken quality and health all enable it to be a unique solutions provider to the food safety threats facing China’s animal protein sector. We look forward to being part of the next step of Sunner’s development,” added Julian Wolhardt, Member of KKR.

 

Along with the equity investment, KKR and Sunner entered into a strategic cooperation agreement and will form a joint working group to drive value in operational improvement, corporate governance and other strategic initiatives.