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Primavera Capital, Ant Financial to invest $460m in Yum China

FBR Staff Writer Published 06 September 2016

US-based Yum! Brands has entered into an agreement with Primavera Capital and Ant Financial Services to invest a total of $460m in Yum China.

While Primavera Capital is a China-based global private equity firm, Ant Financial is an online and mobile financial services provider that operates Alipay mobile payments platform.

The investment is concurrent with the completion of Yum China’s spinoff from Yum! Brands.

As per the terms of the agreements, Primavera and Ant Financial will invest $410m and $50m, respectively, in Yum China.

The spinoff and concurrent completion of the Primavera and Ant Financial investments are expected to take place on 31 October 2016.

The completion of the deals will see Yum China to start trading on the New York Stock Exchange as an independent company from 1 November.

Yum! Brands has also appointed the founder of Primavera Dr. Fred Hu, former chairman of Greater China at Goldman Sachs, as non-executive chairman of the board of Yum China.

Yum! Brands chief executive officer Greg Creed said: “The investments from Primavera and Ant Financial in Yum China mark another important milestone in our plans to separate the China business and create a solid foundation for Yum China as it prepares to become an independent restaurant powerhouse.”

However, the investment transactions are subject to completion of the spinoff and other customary closing conditions.

After the completion of the transactions, Yum China Holdings will become a licensee of Yum! Brands in Mainland China and will have exclusive rights to KFC, Pizza Hut, and Taco Bell.

Based in Louisville, Kentucky, Yum! Brands has nearly 43,000 restaurants in almost 140 countries and territories.

While Goldman Sachs acted as financial advisor to Yum! Brands and Yum China in the transaction, Wachtell, Lipton, Rosen & Katz served as legal advisors.

Yum China chief executive officer said: “The investment is a clear endorsement of our business strategy and growth potential, and their diverse experience and relationships will be extremely beneficial.”

Image: KFC/Taco Bell in Oscoda, Michigan. Photo courtesy of TenPoundHammer/Wikipedia.