Talks are underway between London-based CVC and South Beauty Investment Co. Ltd and the UK company is looking to buy a major holding in the Chinese company for $300 million. South Beauty is known for its high-end restaurants and serves the businesses of China, as well as political elite.
The China-based company had earlier hired banks for a Hong Kong IPO, which was worth around $200 million and was planned for 2013. If the deal materializes, it will be one of the latest deals in a number of successful acquisitions in Chinese restaurant chains by foreign private equity. Small and medium sized companies in the country prefer to exit their investments via IPOs, which usually bring higher returns.
Sources have revealed that there are stricter regulations for offerings in the country. Private equity firms are being helped by the public market in China, in addition to tighter credit conditions. Meanwhile, according to the deal which is under discussion, CVC is planning to buy 69% of South Beauty and the restaurant chain’s founder Zhang Lan will own a 31 percent stake.
The food market in China is slowly booming for local companies, as foreign companies have reduced their investments due to the economic slowdown.
Photo Credits: China Daily