18 February 2019

CVC-South Beauty talks show shift in stake sales, Reuters says

A potential deal for London-based CVC Capital Partners to buy a US$300 million majority stake in Chinese restaurant chain South Beauty Investment Co. Ltd. highlights a growing willingness by smaller China firms to cede control to foreign private equity amid unfavorable IPO prospects, Reuters reported Wednesday. If it goes through, the deal would be the latest in a string of stake acquisitions in Chinese restaurant chains by foreign private equity, the report said. Owners of China’s small and medium-sized companies prefer to exit their investments through IPOs, but stricter regulations for offerings in China, a choppy public market in Hong Kong and tighter credit conditions are helping private equity firms, which are unable to exit minority stakes through public listings, convince owners to give up control, the report said.

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