Apax sells Chinese restaurant chain Golden Jaguar

The private equity firm acquired the asset in 2011 at a reported valuation of $250 million, but in recent years it has been loss-making.

The deal comes at a time when quality restaurants and luxury goods retailers in China are struggling as a result of moves by Beijing to rein in spending by officials from state-owned enterprises and government agencies. It is part of a broader push to cut down on corruption.

Carnival Group will acquire a 99.99% interest in Nice Race Management (NRML), which controls Golden Jaguar, from Apax subsidiary BFT and Grace Investment, according to a filing.

BFT will receive HK$240.7 million in bonds issued by Carnival Group in return for its 94.99% stake. The bonds have a three-year tenure and a conversion price of HK$1.55 per share. They equate to a 1.11% interest in Carnival Group. The private equity firm also has the option of exchanging all or part of the bonds into NRML shares, which would see it retain up to 46.55% of Golden Jaguar.

Grace will get HK$12.6 million in cash for its 5% holding, while Carnival Group has in addition agreed to subscribe to $33.9 million worth of shares in NRML.

Golden Jaguar was founded in Shanghai in 2003 by Taiwanese entrepreneurs. At the end of 2010, the company had 14 restaurants across eight cities, including Beijing and Shanghai. Golden Jaguar specializes in high-end buffet style dining, but over half of these restaurants were also equipped to offer wedding banquet services.

The restaurants are large-format, found in shopping malls and department stores, as well stand-alone locations, and capable serving more than 500 covers at a time. Apax planned to roll-out in tier-two and tier-three cities and within the first year of the investment six new outlets were opened in Taiyuan, Wuxi, Harbin, Shenyang and Hohhot.

As of year-end 2014, there were 29 Golden Jaguar restaurants in 19 cities. The company's turnover declined from RMB956.8 million ($154.1 million) in 2013 to RMB714.3 million in 2014. Net losses narrowed from RMB231.9 million to RMB210.3 million over the same period.

Nevertheless, Carnival Group - which operates large-scale integrated tourism, hospitality and retail projects in China - said it was reasonably optimistic about Golden Jaguar's prospects. It cited the company's established reputation, the potential for expanding the business, and the general rise in middle class consumption.

Beijing's austerity measures have also caught South Beauty, a Chinese restaurant chain that serves Sichuan-style cuisine to the mid-to-high end business and casual dining market. CVC Capital Partners acquired an 82.7% stake in the company for around $300 million last year but has since seen a sharp decline in revenue.

It emerged in March that CVC and Lan Zhang - South Beauty's founder who retains a minority interest in the business - were involved in arbitration and the former had won an injunction requiring the disclosure and freezing of assets by the latter. There are said to be concerns about potential fraud.

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• Topics
• Exits
• Consumer
• Greater China
• Apax Partners
• Consumer
• Exit
• Trade sale
• China