Chinese restaurant chain South Beauty, also known as Qiaojiangnan, has announced that the group plans to sell parts of its stake to CDH Investments and China International Capital Corporation to raise financing of CNY300 million.
CDH Investments and China International Capital Corporation will invest CNY200 million and CNY100 million, respectively, in the catering subsidiary of South Beauty Group and jointly hold a stake of below 10%. The transaction has been approved by the relevant departments in the Chinese government and South Beauty has received the funds. The capital will be reportedly used for restaurant expansion in China and overseas.
According to reports in local media, South Beauty started to contact investors a year ago. South Beauty said although CDH Investments did not offer the most funding, it finally decided to cooperate with CDH because it appreciated CDH's former investment experience in Chinese firms Mengniu, Belle, and Lining.
Zhang Lan, chairman and founder of South Beauty, told local media that the reason that South Beauty is cooperating with private equity firms is not because it is in need of money buts to promote the development of the company.
Founded in 2000, South Beauty has opened about 40 direct-managed restaurants in first-tier Chinese cities, including Beijing, Shanghai, and Tianjin. According to South Beauty's vice president Du Wei, the company plans to open 20 new restaurants in 2009, of which, one quarter of these restaurants will be opened in the overseas market.