Yum to sell a stake in its Chinese holdings

KFC in China Image copyright Getty Images

Yum Brands is selling a stake in its Chinese division to Primavera Capital and Ant Financial as the company prepares to separate the Chinese unit from the main business.

Primavera Capital, will pay $410m (£308m) and Ant Financial, an affiliate of Alibaba, will invest $50m.

The new investors will have the option to buy an additional 4% stake.

Yum, the owner of Pizza Hut and KFC, is the largest fast food brand in China but has recently faced some trouble.

The company was involved in a scandal over its meat supplier and its connection to bird flu outbreaks.

Yum Brands has also recently been losing ground to competitors like McDonalds.

Still, the company sees potential in the market and has plans to triple the number of its restaurants in China.

A Yum spokesman said the company had not yet decided how the money from the sale would be used, but it is possible it may go towards the firm's expansion plan.

The decision to spin off Yum's Chinese business has been pushed by activist investor Keith Meister, who is a member of Yum's board of directors.

Yum said the separation is on track to take place on 31 October.

Image copyright Getty Images

Ant Financial runs Alibaba's Alipay mobile payment businesses and has been making a push into the Chinese restaurant industry.

The company plans to make Alipay available in Yum restaurants, which will help increase its customers and the company says thus will help to cut waiting times at cash registers.

"Through this collaboration, we aim to help Yum China provide world-class mobile payment services for tens of millions of customers across its brands," said Eric Jing, president of Ant Financial.

Primavera Capital is a powerful China-focused private equity firm founded by an ex-Goldman Sachs banker.

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