Starbucks eyes Boyu Capital as frontrunner in China business revival: sources
Boyu is the likeliest buyer for a controlling stake of the business after outbidding other private equity firms
[HONG KONG] Private equity firm Boyu Capital has emerged as the frontrunner in Starbucks’ search for a partner in its China business, according to people familiar with the matter, as the coffee chain tries to revive its fortunes in its second-biggest market.
Boyu is the likeliest buyer for a controlling stake of the business after outbidding other private equity firms including Carlyle Group, the people said, asking not to be identified because the information is private. A transaction could value the Chinese operations at more than US$4 billion, the people said.
The coffee chain and Boyu may need a few months to negotiate and agree on terms to finalise a deal, the people said, adding that the talks aren’t guaranteed to result in a transaction. Others including Internet companies could join as limited partners to help co-finance a deal, they said.
Representatives for Starbucks and Boyu did not immediately respond to requests seeking comment. Carlyle declined to comment.
Boyu, Carlyle, EQT AB, FountainVest Partners, KKR, Hillhouse Investment and Primavera Capital were among the private equity firms invited to participate in the process to buy a stake in Starbucks China, Bloomberg News reported in August.
Founded in 2011 and based in the Cayman Islands, Boyu invests in private equity, public equities, real estate and infrastructure, according to its website. It also has a venture capital and renewable energy platform. Its private equity business invests in areas such as technology, consumer and retail and health care.
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Starbucks, which opened its first Chinese outlet in Beijing in 1999 and now has about 7,800 stores in more than 250 mainland cities, shortlisted about a dozen potential investors for its China business, including technology companies and private equity firms.
Starbucks chief executive officer Brian Niccol has previously said the China business could grow to 20,000 stores. But the Seattle-based chain has faced searing competition from Chinese brands, particularly Luckin Coffee
Niccol said on a July earnings call with analysts that Starbucks intended to retain a “meaningful” stake in the China business, and that the process to introduce new backers had attracted more than 20 potential investors. BLOOMBERG
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