Here’s how Yum China is leveraging local investors for its spinoff
A USD 460m investment is on its way.
Yum! Brands has inked deals with Ant Financial Services and Primavera Capital Group for the two firms for a USD 460m investment in Yum China, concurrent with the completion of Yum China's spinoff from Yum! Brands.
According to the company's news release, the spinoff and concurrent completion of the of the Primavera and Ant Financial investments are expected to occur on 31 October 2016. Yum China is expected to commence trading on the New York Stock on 1 November 2016 under the ticker symbol "YUMC".
"Under the terms of the agreements, Primavera and Ant Financial will invest $410 million and $50 million, respectively, in Yum China," the release revealed.
The price comes at a 8% discount to the volume-weighted average trading price of Yum China’s equity value during the period commencing 31 days and ending 60 days following completion of the spinoff.
"Primavera and Ant Financial will also receive two tranches of warrants to acquire shares of Yum China common stock reflecting approximately 2% equity ownership interest (in the aggregate) in each tranche to be exercisable in the five-year period following the issuance of those warrants, with strike prices correlating to equity values of $12 billion and $15 billion," the release noted.
Primavera founder Dr. Fred Hu, former chairman of Greater China at Goldman Sachs, will become non-executive chairman of the board of Yum China.
Further, the deals will see Ant Financial Services integrate its Alipay mobile payments platform with Yum China's brands.
“Through this collaboration, we aim to help Yum China provide world-class mobile payment services for tens of millions of customers across its brands. These services include hassle-free Alipay for customers to help shorten queues at the cashier as well as membership solutions for Yum China designed to help manage their customer relations and promotions,” said Eric Jing, president of Ant Financial Services Group.
“Leveraging our Big Data capabilities, KFC and Pizza Hut witnessed promising marketing results through their promotion on multiple Ant Financial platforms. We look forward to further collaborating with Yum China in the future,” noted Jing.
