Majority stake in hot pot chain for sale
April 30, 2012 Category Mergers & Acquisitions, Weekly
Private equity firm Actis, a spin-out of the British government’s investment agency Commonwealth Development Corporation, is selling its majority stake in Xiabu Xiabu Catering Management, a hot pot restaurant chain. It bought the stake for USD50 million in 2008 and is trying to sell it for more than USD150 million. The sale is considered a rare opportunity for foreign investors to obtain control of a household-name restaurant brand in China. Actis has hired investment banks to advise it on the sale, which is considered still in the early stages, as no formal bids have come in. One of Xiabu Xiabu’s main competitors in China is Little Sheep, which was listed in Hong Kong and taken over this year by U.S. fast-food restaurant Yum! Brands, the owner of Pizza Hut and KFC. Little Sheep’s early investors included two private equity funds – British investor 3i Group and China-focused Prax Capital. They both made more than three times their original investment in Little Sheep when they cashed out. Xiabu Xiabu was founded by a Taiwanese businessman in Beijing in 1998 and has expanded aggressively in the past few years. Xiabu Xiabu currently runs more than 240 restaurants around the country and aims to expand its restaurant network to the rest of the world. A typical meal at Xiabu Xiabu costs about CNY30 per person, which is similar to McDonald’s.
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