China Investment Corp, Hillhouse Reportedly Aims To Buy Yum China


Chinese sovereign fund China Investment Corp (CIC) is reportedly joining a consortium led by Hillhouse Capital Group to buy Yum China Holdings, Inc., the operator of KFC and Pizza Hut in mainland China, according to a media report.

Other investors of the consortium include KKR & Co., DCP Capital, the investment firm run by former KKR & Co. senior executives, and Hong Kong-based regional firm Baring Private Equity Asia. Primavera Capital Group, a current investor in Yum China, could also join the bidding group.

The deal is still not finalized, and may still fall apart. Hillhouse and Baring declined to comment. KKR, CIC, DCP and Primavera did not immediately respond to China Money Network’s email seeking comments.

Shares of Yum China have fallen 14.5% this year before yesterday. The consortium is considering taking Yum China private and switching to the Hong Kong bourse for a listing, because of the city’s proximity to the Chinese market, potentially higher valuation and its convenient time zone for executives, according to the report.

Yum China, which has a current market value of US$13.6 billion, separated from Yum! Brands Inc. in 2016 to become an independent and then listed on the New York Stock Exchange. As of the end of 2017, the company had over 7,900 restaurants in China across brands including KFC, Pizza Hut, East Dawning, Little Sheep and Taco Bell.

In 2017, it recorded revenues of US$7.1 billion, representing 5.8% increase compared to 2016, and a net income of US$403 million, representing a 20% decrease from 2016.

Two years ago, a KKR-led consortium, which including CIC as well, had discussions with Yum Brands! about taking a controlling stake in its China business, but failed to get a deal done.

 
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