PRIVATE equity firms Yunfeng Capital, founded by Alibaba Group Holding Ltd.’s Jack Ma, and CITIC Private Equity Funds Management have agreed to invest at least 2 billion yuan (US$320 million) in a unit of Inner Mongolia Yili Industrial Group Co.

    Yunfeng and CITIC Private Equity, a unit of China’s CITIC Group, will buy 60 percent of Inner Mongolia Yili Livestock Development Co., Shanghai-listed Inner Mongolia Yili Industrial said Friday.

    The investment is Yunfeng’s first in China’s food sector. Its past investments are focused on technology, media and telecommunications.

    The deal underscores a trend for private equity investors buying into China’s food industry as the government works to improve food safety.

    Other Chinese tech companies have also made forays into Chinese agriculture. Netease Inc., a Chinese Internet portal, has been raising pigs since 2009, and PC maker Lenovo Group Ltd.’s parent company, Legend Holdings Inc., has invested in fruits and tea in China.

    Inner Mongolia Yili Industrial is one of China’s biggest milk powder makers, and operates in a sector where China has announced moves to support domestic champions who will be able to compete against global rivals.

    Milk powder has been a sensitive topic since 2008, when milk tainted with the industrial chemical melamine killed at least six infants and left thousands ill.

    In the run-up to Alibaba’s U.S. listing, Ma and the company have been making deals to bolster its core business and broaden its appeal. (SD-Agencies)