Also involved are China-based global private equity firm Primavera Capital Group and online and Alibaba subsidiary, mobile financial services provider Ant Financial Services Group, which runs the Alipay mobile payments platform.
The spinoff and concurrent finalisation of the investment are expected to occur on October 31, with Yum China to start trading on the New York Stock Exchange the next day as an independent company.
Under the terms of the agreements, Primavera and Ant Financial will invest $410 million and $50 million respectively in Yum China.
Primavera founder Dr Fred Hu, former greater China chairman at Goldman Sachs, will be non-executive chairman of the board of Yum China.
“Yum China is an established leader in the retail and restaurant industry, which we believe is poised for continued strong growth and unit expansion as cities across China invest in new transportation hubs, shopping malls and other physical and electronic infrastructure,” says Dr Hu, describing the Yum China moves as a “new and exciting chapter”.
“Through this collaboration, we aim to help Yum China provide world-class mobile payment services for tens of millions of customers across its brands,” says Ant Financial Service Group president Eric Jing. “These services include hassle-free Alipay for customers to help shorten queues at the cashier, as well as membership services for Yum China designed to help manage its customer relations and promotions.”
“Primavera and Ant Financial both have deep insights into the rapid urbanisation and digital transformation that is driving the evolution of China’s economy,” says Yum China CEO Micky Pant.
“The investments from Primavera and Ant Financial in Yum China mark another important milestone in our plans to separate the China business and create a solid foundation for Yum China as it prepares to become an independent restaurant powerhouse,” says Yum! Brands CEO Greg Creed.
As a licensee of Yum! Brands in China, Yum China Holdings will have exclusive rights to KFC, Pizza Hut and Taco Bell, which has yet to expand to China. KFC and Pizza Hut have more than 7200 restaurants in more than 1000 cities in China.