TPG Capital has reportedly withdrawn from the bidding race for McDonald’s China and Hong Kong 20-year franchise rights.
That leaves two rival private equity firms in the race – Bain Capital and Carlyle Group – competing with two Chinese companies previously reported to be in the negotiations: retailer Wumart Stores and Sanpower Group.
TPG’s withdrawal was confirmed overnight by unidentified sources close to the matter and reported by several news networks.
Carlyle Group has partnered with Citic Group and Bain with GreenTree Hospitality, a hotel group.
McDonald’s is seeking as much as $3 billion for the China rights, which come with a 10-year expansion option.
There are about 2400 McDonald’s restaurants in China and Hong Kong and the US company wants its master franchisee to expand that network rapidly to compete with rival Yum! China’s expansion plans.
The ongoing presence of private equity bidders in the process is surprising, because McDonald’s has made it clear it is seeking a long-term partner rather than private equity firms, which typically cash out after a few years.
Meanwhile, the simultaneous sale of McDonald’s Korea’s rights has fallen over with the last prospective bidder, Maeil Dairies Industry Co, dropping out of the running.  
McDonald’s, which directly manages about 400 stores in South Korea, has been looking for local partners to run the Korean outlets as franchise stores that pay annual commissions instead. The deal initially drew interests from several investors, including CJ and NHN Entertainment, but they have nixed their plans.
Maeil Dairies had formed a consortium with Carlyle Group, but pulled out after failing to agree on terms of contract, industry sources familiar with the matter told the Yonhap news agency.
“We can’t verify the specific details as McDonald’s headquarters office is in charge of the bidding process, but the sales process is still under way,” an official at McDonald’s Korea said, without elaborating on the deal.