HONG KONG—A private-equity fund co-founded by the executive chairman of Chinese e-commerce giant Alibaba Group Holding, Jack Ma, will invest in a unit of a Shanghai-listed milk producer.
In a filing to the Shanghai Stock Exchange, Inner Mongolia Yili Industrial Group 600887.SH -2.32% said Mr. Ma's Yunfeng Capital and China-based Citic Private Equity Funds Management Co. will invest in the unlisted unit by buying new shares worth at least 2 billion yuan ($320 million).
After the share sale, Citic Private Equity and Yunfeng will own a combined 60% stake in the unit, Inner Mongolia Yili said.
Citic Private Equity and Yunfeng Capital weren't immediately available for comment. A Yili spokesman declined to comment.
In the run-up to Alibaba's U.S. listing, Mr. Ma and the company have been making deals to bolster its core business and broaden its appeal. The investment isn't the first by Alibaba or its linked entities in China's agricultural sector. Alibaba launched a project in partnership with Zhejiang Xinghe E-commerce Co. in May, whereby farmers can rent out their land over the Internet to the company, with the land consolidated under a cooperative, according to state news agency Xinhua. Users of Taobao, Alibaba's e-commerce website, can buy goods from the land. Farmers in turn receive rent and a salary from the agricultural cooperative.
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.
The news comes as Alibaba said Thursday it bought a 50% stake in China's Guangzhou Evergrande soccer team for 1.2 billion yuan ($192 million), a deal that Mr. Ma ironed out in a mere 15 minutes.
In April, Alibaba agreed to buy a 16.5% stake in Youku Tudou Inc., a Chinese online-video company that works like a combination of YouTube and Netflix Inc. Alibaba and Mr. Ma have also invested in production companies. In April, a company owned by Mr. Ma agreed to pay 3.3 billion yuan for more than 20% of a Chinese financial-software developer.
Yili was hit by a scandal in 2012 when it recalled some milk powder products after a government inspection found mercury in them. The incident was the latest in a series of problems to hit China's dairy industry, the biggest being the melamine scandal in 2008 when six babies died. Yili was one of 22 milk producers involved in that scandal. Since then, Beijing has pushed consolidation in China's dairy industry to raise quality standards and output as demand for dairy products increases rapidly in the country.
—Sonja Cheung, Juro Osawa and Kersten Zhang contributed to this article.
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