(Yicai Global) Sept. 5 -- Ant Financial Services Group, an affiliate of Alibaba Group Holdings Ltd., and Primavera Capital Group have paid a total USD460 million for stakes in Yum! Restaurants China Investment Co. as part of a planned spin-off, Yum! Brands Inc. [NYSE:YUM] told Yicai Global on Sept. 2.
Ant Financial has taken a 5.9 percent stake in Yum China, while Primavera Capital has acquired 4.3 percent. The investments will take place concurrently with the spin-off of Yum China from Yum! Brands, owner of Kentucky Fried Chicken and Pizza Hut. Yum China will start trading on the New York Stock Exchange on Nov. 1.
Yum! Brands was the first restaurant chain to enter the Chinese market. In 1987, it set up a KFC near Beijing's Tiananmen Square. It was one of the city's most stylish restaurants in the 1990s. In 1993, Yum! Brands set up a China division in Shanghai to operate brands including KFC, Pizza Hut, and Pizza Hut Home Service. Last October, Yum! Brands said it would spin off its China business with Yum China becoming a franchise. Yum China will pay royalties to the group for the use of the brand.
Yum! Brands also said the founder of Primavera Capital, Mr. Fred Hu, will become non-executive chairman of Yum China. Mr. Hu is a former chairman for Greater China at Goldman Sachs.
Ant Financial and Primavera Capital will invest USD410 million and USD50 million, respectively, in Yum China. An 8 percent discount will be granted based on the weighted average trading price of Yum China's stock value during the period between 31 days and 60 days after the completion of the spinoff. In addition, the two investors can also continue to subscribe to the company's shares over the next five years.
At the end of February, Yum China had over 6,800 restaurants in the country, including more than 5,000 KFC outlets in more than 1,100 cities, and over 1,500 Pizza Huts in more than 400 cities. The total number of its employees exceeded 410,000.
Primavera Capital is a Chinese private equity firm, and Ant Financial operates the widely used Alipay mobile payments platform.