CVC completes South Beauty restaurant acquisition

Financial details were not disclosed but when the investment was first reported last autumn the price was said to be around $300 million. China's Ministry of Commerce approved the transaction in November 2013.

Lan Zhang, South Beauty's founder, remains a shareholder in the business and continues to participate in strategic decision-making in partnership with the CVC team. Yong An retains his position as president and executive director of the board in charge of day-to-day operations.

Zhang said CVC and management share a common view regarding brand positioning, future growth areas, corporate culture and values. She expects the new investment to drive greater economies of scale and increase operational efficiency.

"I regard the ‘South Beauty' brand as my daughter. As founder of South Beauty, I have great sentiment attached to this brand, but I genuinely believe that this partnership will create a bright future for South Beauty in the years to come," Zhang added in a statement.

Zhang opened her first restaurant in 1991 after returning to China from Canada, but the first South Beauty outlet, located in Beijing's central business district, dates back to 2000. The company now has nearly 80 directly-operated restaurants in 24 cities across China, serving Sichuan-style dishes to the mid-to-high end business and casual dining market.

The CVC statement describes the company's core competencies as trendy décor, authentic cuisine, a central procurement system and standardized management. A new menu was launched in March focusing on casual diners and new business models such as home delivery and banquet services are being explored. There are also plans to work with Taobao unit Tao Dian Dian on an online-to-offline business model.

South Beauty sold a minority stake to CDH Investments and China International Capital Corporation (CICC) in 2008 and previously sought to raise as much as $200 million via an IPO, but the application was rejected by regulators. Zhang told media in 2011 that she regretted taking PE investment.

This is CVC's third China control deal in recent months, following investments in quick service restaurant operator Da Niang Dumpling Holdings and overseas education counseling service provider EIC. These transactions give credence to the theory that traditional buyouts - where control transfers to the PE investor - are becoming more readily available in China's private sector.

CVC has been raising its fourth pan-Asian fund. The vehicle has a hard cap of $3.5 billion, including a $200 million GP commitment, although this may well be exceeded.

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• Topics
• Buyouts
• Greater China
• Consumer
• Consumer
• buyout
• China
• CVC Capital Partners