(Bloomberg) -- China Youran Dairy Holding Ltd. is working with advisers to raise between $300 million and $400 million in a new funding round before its potential initial public offering, according to people familiar with the situation.

The company has reached out to prospective investors for the latest round, which could give it a valuation of about $2 billion, said the people, who asked not to be identified as the information is private. Hong Kong-based private equity firm PAG and Inner Mongolia Yili Industrial Group Co. hold 41% and 40% stakes respectively in the dairy product maker, Youran said in an announcement when it acquired the control of another dairy firm last year. PAG invested in Youran in 2016, according to its website.

Deliberations are ongoing and details of Youran’s pre-IPO funding round could still change, according to the people. A representative for PAG declined to comment, while a representative for Yili said the company hasn’t received the relevant information. A representative for Youran didn’t immediately respond to requests for comment.

Founded in 2007, Youran produces and sells fresh milk and engages in related animal farming activities in China. The company’s revenue in 2019 was 8 billion yuan ($1.1 billion) and its net income was around 500 million yuan, according to Yili’s latest annual report. Youran bought a majority stake of Inner Mongolia Saikexing Reproductive Biotechnology Co. last year for about 2.3 billion yuan.

Shares of Yili slipped about 1.1% in Shanghai on Tuesday, while the benchmark Shanghai Stock Exchange Composite Index was little changed.

(Updated to add Yili’s shares in last paragraph. An earlier version corrected the price of Saikexing deal in fourth paragraph.)

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