Primavera and Ant Financial Services invest $460m in Yum China

China-based global private equity firm Primavera Capital Group and mobile financial services provider Ant Financial Services Group have agreed to collectively invest $460m in Yum China.

The completion of Yum China’s spinoff from American fast food company Yum! Brands! is expected to be completed on 31 October.

Following the spinoff and completion of the investments, Yum China will start trading on the New York Stock Exchange (NYSE) as an independent company from 1 November.

Primavera founder Fred Hu said: “We have long-admired the Yum China business and are looking forward to collaborating with the Board and management to realise the company’s full potential.

“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 that will support consumption.”

According to the agreement, Primavera and Ant Financial will respectively invest $410m and $50m in Yum China. The final number of shares issued to Primavera and Ant Financial will be subject to a post-closing adjustment.

Primavera and Ant Financial will also receive two tranches of warrants to acquire shares of Yum China common stock reflecting an equity ownership interest of nearly 2% in each tranche to be exercisable in the five-year period, with strike prices linked to equity values of $12bn and $15bn.

The closing of the investments are subject to completion of the spinoff and other customary closing conditions.