3i Divests Capital From Chinese Hotpot Restaurant Chain

3i, the publicly listed private equity firm, has divested its 11.32% stake in Chinese hotpot restaurant chain, Little Sheep Group, to Yum Brands Inc. Financial details were not disclosed. In June 2006 3i invested $20m in the company with Prax

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3i, the publicly-listed private equity firm, has divested its 11.32% stake in Chinese hotpot restaurant chain, Little Sheep Group, to Yum! Brands Inc. Financial details were not disclosed.

In June 2006 3i invested $20m in the company with Prax Capital, a China-focused private equity firm, as co-investor investing another $5m.

Little Sheep achieved an IPO on the Hong Kong Stock Exchange in June last year, which, at the time, was valued above HK$3 billion. The company currently has a 6% market share in China, according to 3i.

During its investment, 3i assisted Little Sheep with franchise and business strategy development, executive and board recruitment, corporate governance and IPO preparation in its primary market of China.

As of 31 December 2008, the company operated 375 restaurants and reported a 34% increase in revenues and a 41% hike in profits from RMB91 million ($13 million) to RMB129 million ($19 million) for 2008.

Yum! Brands, which calls itself “The world’s largest restaurant company”, is best known for its KFC, Pizza Hut and Taco Bell brands. With more than 36,000 restaurants in more than 110 countries and territories, the company saw revenues in excess of $11 billion in 2008.

“We have been proud to work with such an exceptional management team and outstanding business as Little Sheep during the past three years,” says Anna Cheung, 3i partner, and co-head of 3i China. “This is a great example of 3i’s ability to generate good returns even in a challenging market environment, by creating real value and improved performance through hard work, collaboration with the company and a strong partnership style. We believe that Yum! is an excellent long-term strategic partner for Little Sheep in the next phase of its growth. China is an important investment market for 3i and we will continue to look for attractive opportunities in the region.”

Last week, 3i announced that it had made a 65 million investment in European medical diagnostics company Labco. The firm has made a commitment to invest 140 million in the company in total.

D.C.

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