Private equity firm 3i has announced the divestment of its 11.32 per cent stake in China’s hotpot restaurant chain, Little Sheep Group, to Yum! Brands.
Private equity firm 3i has announced the divestment of its 11.32 per cent stake in China’s hotpot restaurant chain, Little Sheep Group, to Yum! Brands.
This brings 3i’s three year partnership with Little Sheep to a close.
3i has been an active partner to Little Sheep and, via its board position, assisted with franchise and business strategy development, executive and board recruitment, corporate governance and IPO preparation in its primary market of China.
Specifically, the 3i team helped Little Sheep to sharpen its strategic focus on company-owned restaurants, developing its franchise model and aligning standards, creating operational efficiencies, and improving quality control, customer service and restaurant design.
Additionally, 3i introduced non-executive directors to the company board and played a pivotal role in supporting Little Sheep’s IPO in Hong Kong in June.
Little Sheep has a six per cent market share in the People’s Republic of China. As of 31 December 2008, the company operated 375 restaurants. Since 3i’s USD20m investment in June 2006, the group reported a 34 per cent increase in revenues and a 41 per cent rise in profits from RMB91m (USD13m) to RMB129m (USD19m) for 2008.
Anna Cheung, 3i partner and co-head of 3i China, says: ‘We have been proud to work with such an exceptional management team and outstanding business as Little Sheep during the past three years. 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.’
