China sovereign fund said to back deal for Yum China


HONG KONG • China Investment Corp (CIC) is backing a potential takeover of Yum China Holdings Inc, which runs Kentucky Fried Chicken (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, the investment firm run by former KKR & Co senior executives, are part of a consortium with Hillhouse Capital that’s considering a buyout of Yum China, according to the people. Baring Private Equity Asia is also joining the investor group, which already includes KKR, the people said, asking not to be identified because the information is private.

Yum China shares have fallen 14.5% this year, giving it a market value of US$13.1 billion (RM53.58 billion) in New York.

The consortium is 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 show.

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

No final decisions have been made, and the makeup of the bidding group could still change, the people said. There’s no certainty the deliberations will lead to a transaction, they said.

DCP Capital was started last year by buyout veterans including David Liu, the former China head and co-head of Asia private equity at KKR.