YUM Yum Brands Inc

Operator of KFC and Pizza Hut could raise more than $400 million in 2017 listing

By Yantoultra Ngui in Kuala Lumpur, P.R. Venkat in Singapore and Alec Macfarlane in Hong Kong 

A consortium that includes private-equity firm CVC Capital Partners is planning an initial public offering for an operator of KFC and Pizza Hut restaurants in Southeast Asia that could raise more than $400 million, according to people familiar with the matter.

The owners of Malaysia's QSR Brands, including CVC and Malaysian pension fund Employees Provident Fund, are considering listing the franchise operator on the local stock exchange next year, the people said. QSR Brands is expected to invite bankers to pitch for roles on the IPO next month, one of the people said.

QSR Brands is currently renegotiating royalty fees with Yum Brands Inc., the Louisville, Ky.-based owner of the KFC and Pizza Hut brands, ahead of the planned IPO, the people said, while declining to give further details.

But one of the people said that CVC wants a new fee agreement with Yum Brands in place before the IPO so that potential investors can have a clearer view of QSR's business prospects.

Yum Brands didn't respond to a request for comment.

CVC, the Malaysian pension fund and Johor Corp., an investment arm of the Johor state government, took QSR private in a $1.3 billion deal in 2012. Johor Corp., which owns a 51% stake in QSR Brands, might continue to hold its shares in the company for longer than the other investors, the people said.

"There is nothing yet to share at this juncture as it is still early days," a QSR Brands spokesman said. CVC declined to comment, while EPF and Johor Corp. weren't immediately available to comment.

QSR's offering could appeal to investors given the growing appetite for consumer stocks in Southeast Asia, as a decline in commodity prices has weighed on shares of the region's oil and gas companies.

The IPO, if successful, would be the first sizable consumer-related offering in Malaysia in three years. The biggest to date was convenience-store operator 7-Eleven Malaysia Holdings Bhd.'s IPO, which raised $225 million in 2014.

Based in Selangor, Malaysia, QSR operates more than 450 Pizza Hut restaurants in Malaysia and Singapore and over 750 KFC restaurants in Malaysia, Singapore, Brunei and Cambodia, according to its website. The company is also engaged in poultry production and processing, baking and sauce production. One of the people said that the IPO could exclude QSR's poultry production business.

London-based CVC, which owns a stake in motor-racing franchise Formula One Group, has a longstanding presence in Southeast Asia. Since 2013, CVC has raised more than $2 billion through share sales of Indonesia's PT Matahari Department Store Tbk.

Write to P.R. Venkat at venkat.pr@wsj.com and Alec Macfarlane at Alec.Macfarlane@wsj.com

(END) Dow Jones Newswires

August 31, 2016 02:47 ET (06:47 GMT)

Yum Brands (NYSE:YUM)
Historical Stock Chart
From Mar 2024 to Apr 2024

Yum Brands (NYSE:YUM)
Historical Stock Chart
From Apr 2023 to Apr 2024