Wed, Aug 15, 2018 - Page 12 News List

Sovereign fund backing Yum China deal: sources

CLOSER TO HOME?One source said the consortium is mulling taking the fast-food restaurant operator private and possibly relisting it in Hong Kong at a later date

Bloomberg

China Investment Corp (中國投資) is backing a potential takeover of Yum China Holdings Inc (百勝中國), which runs KFC and Pizza Hut outlets in the world’s most populous nation, people with knowledge of the matter said.

The sovereign fund and DCP Capital, an investment firm run by former KKR & Co senior executives, are part of a consortium with Hillhouse Capital Group that was considering a buyout of Yum China, the people said.

Baring Private Equity Asia has also joined the investor group, which already includes KKR, said the people, who asked for anonymity.

Yum China shares have fallen 14.5 percent this year, giving it a market value of US$13.1 billion in New York.

The consortium was considering taking Yum China private, with an eye to potentially relisting the business in Hong Kong at a later date, one of the people said.

A takeover of the company, which was spun off from Yum Brands Inc in 2016, would be the biggest-ever Chinese takeover of a consumer firm, data compiled by Bloomberg showed.

Private equity firm Primavera Capital, which owned 4.3 percent of Yum China as of June, has been weighing options for its stake in the company and could consider joining a bidding group, the people said.

No final decisions have been made and the makeup of the investment group could still change, the people added.

DCP Capital was started last year by buyout veterans including David Liu (劉海峰), the former China head and cohead of Asia private equity at KKR.

In May, it agreed to invest in Venus Medtech (杭州?明醫療), a Hangzhou, China-based developer of heart valve replacements that is backed by Goldman Sachs Group Inc.

Yum China operates the country’s biggest network of fast-food restaurants, with about 8,200 outlets spread across more than 1,200 cities at the end of June, its latest results showed.

It has struggled to attract younger Chinese diners to its Pizza Hut restaurants in the face of increasing local competition and changing eating habits that favor healthier fare.

The potential takeover comes as an escalating trade war fuels speculation that China could turn to consumer boycotts as part of its pushback against US President Donald Trump’s tariffs.

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