China Investment Corp (CIC), the State-owned sovereign wealth fund, is backing a group of investors who have expressed interest in buying a majority stake in Yum Brands Inc's China unit, Bloomberg reported Tuesday, citing people with knowledge of the matter.
A deal could value Yum's China unit at $7 billion to $8 billion, Bloomberg said.
The investor group intends to buy as much as 100 percent of Yum China, the report said, citing sources.
The group also includes KKR & Co LP and Baring Private Equity Asia.
Yum reportedly plans to spin off its 6,900 restaurants in China, which account for about half of the company's total sales, by the end of 2016. Yum China would get listed on the New York Stock Exchange, and possibly in Hong Kong.
Yum declined to comment on the report but reiterated its plan to separate Yum and Yum China into two "powerful, independent, focused growth companies."
Yum said in a statement sent to the Global Times on Tuesday that it will provide updates on the plan at appropriate times but "won't comment on rumors or speculation."
CIC did not reply to an e-mailed query from the Global Times as of press time.
Sources told Reuters in March that Yum was talking with private equity firms KKR & Co and Hopu Investments, among others, over the sale of a minority stake in its China unit.
Analysts said that Yum may sell stakes in Yum China in an attempt to raise the unit's market valuation ahead of an IPO.
"But the US company is unlikely to completely sell Yum China, which still offers promising prospects thanks to its high brand awareness among Chinese people," Chen Yuefeng, editor-in-chief of the China Chain Store magazine, told the Global Times Tuesday.
In the fourth quarter of 2015, the same-store sales of Yum's China division grew 2 percent year-on-year.
Chen attributed the private equity sector's great interest in Yum China to the expectation of gaining benefits from a future IPO.
Yum China may choose a Chinese-led consortium as its strategic investor so as to have a better access to Chinese guanxi (connections) networks, he noted.
