The China-backed investor group is interested in buying as much as 100 percent of Yum China. Yum is considering all options, though it may still decide to pursue the sale of a minority stake or proceed with a previously announced tax-free spinoff of the business, according to sources familiar with the matter.
The company isn't currently running a formal sale process.
Jason Yu, general manager of Kantar Worldpanel China, said for CIC, it can benefit from the scale and presence of Yum in China to extract more value by reviewing the costs and identify key value drivers or restructuring the business. This will deliver longer-term return for the sovereign wealth fund, Yu said.
"I believe they can still extract value from a troubled business unit. If they can help them reset the business strategy, focus and portfolio, they can benefit from the recovery."
He said Yum can gain from the financial resources provided by CIC and other private equity companies to upgrade their stores and innovate their offers as well as expand their portfolios to more cities in China.
"The cash support will provide much needed resources while they don't have compromise on short-term investor pressure," said Yu.
Yum bowed to activist-investor pressure in October and agreed to separate its China business from its US operations. Hedge fund manager Keith Meister, a protege of billionaire Carl Icahn, said Yum's Asian market could be better served with a more focused business.
China accounted for about 53 percent of Yum's revenue last year, data compiled by Bloomberg show. Yum's China division contributed 57 percent of the company's overall revenue and 54 percent of its operating profit in the latest quarter.
Despite its leading position, Yum has seen its market share continuously drop from 39.8 percent in 2012 to 32.7 in 2013, 28.3 in 2014 and 23.9 percent in 2015.
The second-largest fast-food chain in China, McDonald's Corp, has seen its shares decline from 14.9 percent in 2012 to 13.8 percent in 2015. Ting Hsin International Group is in the third place, according to Euromonitor International.
Last month, McDonald's China announced it was on the lookout for strategic investment partners in the mainland to help it open another 1,000 restaurants by 2020. The Chinese mainland is the company's third-largest market after the United States and Japan.
Bloomberg contributed to this story
