Yum Brands, the owner of Pizza Hut and KFC, is selling a stake in its Chinese division to Primavera Capital and Ant Financial as it prepares to spin off the unit. Primavera will pay $410m (£308m) for a stake, while Ant Financial, an affiliate of Alibaba, will invest $50m. The investors will also have the option to buy an additional 4% stake.
Yum is the largest fast food brand in China but has faced recent challenges, including a scandal over its meat supplier and the impact of bird flu outbreaks. The company has also been losing ground to competitors like McDonald's. Despite this, Yum sees potential in the market and plans to triple the number of its restaurants in China.
A Yum spokesman said the company had not yet decided how the proceeds from the sale would be used, but they may go towards its expansion plan. The decision to spin off the Chinese business has been pushed by activist investor Keith Meister, a member of Yum's board of directors. The separation is on track to take place on 31 October.
Ant Financial runs Alibaba's Alipay mobile payment service and has been expanding into the Chinese restaurant industry. The company plans to make Alipay available in Yum restaurants, which it says will help cut waiting times at cash registers. 'Through this collaboration, we aim to help Yum China provide world-class mobile payment services for tens of millions of customers across its brands,' said Eric Jing, president of Ant Financial.
Primavera Capital is a China-focused private equity firm founded by a former Goldman Sachs banker.
