Hony scraps plan to purchase Chongqing hotpot chain

In November, a filing with China's Ministry of Commerce (MofCom) revealed that Hony attempted to buy a 93.2% stake in the hot pot restaurant chain through its $2.35 billion fifth fund.

However, both Chongqing Cygnet and Hony have confirmed to Beijing Times that the acquisition was canceled. Rongzhi He, founder and CEO of Chongqing Cygnet, said that two thirds of senior executives were preparing to leave the company if the buyout went through. Hony cannot provide sufficient operational expertise to fill in the gap. 

Chongqing Cygnet was founded in 1982 and operates more than 300 restaurants in China. It wants to open 50 more outlets this year. Sequoia and SIG Asia invested RMB200 million ($33 million) for an undisclosed stake in 2007, AVCJ Research's records show. The restaurant chain was expected to go public but shelved plans due to the global financial crisis and then the embargo on domestic IPOs.

"[Founder] He doesn't want to give up the business after 30 years of operation. She has a lot of emotion to the brand and she wants to keep operating by her own. Therefore she won't consider introducing any new investors in the firm. Hony expresses understanding and respect," a spokesperson told Beijing Times.

Hony is seeing more buyout opportunities involving healthcare and restaurant chains and it has created two sector-focused operational teams to consolidate these industries, according to John Zhao, Hony's CEO.

Three months ago, the PE firm agreed to acquire a RMB15 billion stake in Chinese hotel operator Shanghai Jin Jiang International Hotels Development. In July, the China-focused PE firm bought UK-based restaurant chain Pizza Express for GBP900 million ($1.54 billion).

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• Buyouts
• Consumer
• China
• buyout
• Consumer
• Hony Capital