McDonald’s China owners Carlyle, Trustar plan US$4 billion exit
CARLYLE Group and Trustar Capital are seeking to raise US$4 billion from funds including GIC to buy part of their stakes in McDonalds’ operations in Hong Kong and mainland China, providing a partial exit for the buyout firms after they bought the business six years ago, people familiar with the matter said.
Mubadala Investment, the Abu Dhabi sovereign wealth fund, has also been approached about the deal that values the business at up to US$10 billion including debt, the people said. Shareholders have agreed to the plan, and the asset managers aim to finalise an agreement with investors in the fourth quarter, they said, asking not to be identified discussing private matters.
The private equity firms are setting up a new vehicle to provide a partial exit for existing investors while attracting fresh capital to fuel restaurant growth. Rolling over assets into a new fund has become an increasingly popular way for buyout firms to generate liquidity for their investors after volatile public markets and spiking interest rates made exits harder over the past 18 months.
Representatives at Carlyle, Trustar, Mubadala and GIC declined to comment.
The fast-food chain aims to increase its stores to 10,000, leveraging the capital and other resources from shareholders as it capitalises on sustainable growth in China, a spokesperson said in response to Bloomberg’s inquiry.
Following a record year in 2021, the value of exits in Asia-Pacific plunged 33 per cent to US$132 billion last year, 1 per cent below the previous five-year average, according to Bain & Co, which cited declining stock prices and listings. Continuation funds enable managers to retain performing assets when funds are nearing the end of their terms, allowing for later exits when market conditions improve.
McDonald’s sold about 80 per cent of its China and Hong Kong operations for around US$1.7 billion in 2017, valuing the business at as much as US$2.08 billion. The number of McDonald’s China outlets has more than doubled since then to 5,400, along with 250 in Hong Kong. The US fast-food giant plans to open another 900 stores this year in China.
Carlyle and Trustar, which own 28 per cent and 42 per cent respectively, will sell down a partial stake and may reinvest some of the capital in the new vehicle. They will retain control to manage and expand the business.
Singapore’s GIC is among the backers of Carlyle’s fourth Asia fund that invested in the restaurant chain in 2017. BLOOMBERG
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