Actis in Chinese casual dining MBO

The emerging markets private equity firm had been tracking the Chinese restaurant industry for the past four years with no less than 50 companies coming under its radar. Bellagio, a prominent brand within the casual dining sub-sector, emerged early on as a key target. It achieved high ratings for brand awareness and customer advocacy in a consumer survey conducted by the investor.

"What really changed the game was our collaboration with Joseph Han," a spokesperson for Actis tells AVCJ, referring to the former COO of restaurant brand operator Yum! Brands China, who Actis has appointed as chairman and CEO of Bellagio. "We knew him through our sector networks as a result of us being in the industry for some time."

Han, who has become a minority investor as part of the deal, was happy to collaborate with the private equity firm, having worked for a short period for an asset management firm following his retirement from Yum!

The deal was led by Meng Ann Lim, head of China and Southeast Asia at Actis.

The initial idea was to back a buy-and-build restaurant platform and install Han as CEO, but after scouring the Chinese restaurant industry, it concluded there were insufficient targets for that plan to work. Bellagio was thus transacted as a standalone investment, representing the last deal to be channeled through Actis China Fund 3, which is now fully deployed.

"Han has a personal relationship with the founder of Bellagio and we partnered with him to make the pitch to the company," says Actis' spokesperson. "After the initial introduction, we suggested some operational improvements for the company in a bid to demonstrate our ability to the founder."

Fred Lin will remain at the company as general manager, while a number of new hires have been made in operations, finance and product development. The management team retains a minority shareholding in the business.

Founded in 2001 in Shanghai by the Lin Family, the company - renowned for its Taiwanese-style dishes and shaved ice desserts - has 35 restaurants across various Chinese cities, as well as in Macau and the Philippines. It employs 2,000 people.

The fresh capital will enable Bellagio to expand its restaurant network in top-tier Chinese cities such as Beijing and Shanghai, and second-tier cities, including Nanjing, Wuhan and Fuzhou. The annual average middle class household income in a tier-two city is in excess of RMB60,000 ($9,500), compared to more than RMB100,000 in the first tier.

However, second-tier cities are seeing rapid consumer growth and are therefore expected to form an important part of the Bellagio platform going forward.

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