Carlyle Group LP, a US private equity firm, said on Thursday [18 January 2018] that it is raising its second renminbi-denominated fund and plans to accelerate investment in China to tap the growth opportunities in the country. The Washington-based company is also raising an Asia buyout fund that targets a value of about $6.5 billion. A significant amount of the fund is expected to be invested in China as well, according to people with knowledge of the matter…Full Article: China Daily Jan 2018

Key Point

  • As of September 2017, Carlyle Group had invested USD 7.5 billion (total of 90 deals) in China.

ChinaAg Comments

  • In August 2017, USA’s Carlyle Group and its Chinese partner CITIC Group completed its purchase of McDonald’s franchises in mainland China and Hong Kong. The USD 2.08 billion deal will see CITIC Ltd. and CITIC Capital Partners control a joint 52% stake, while Carlyle Group will control 28%. In the wake of CITIC Group and Carlyle Group’s acquisition, McDonald’s China announced its “Vision 2022” plan to increase the number of its mainland restaurants from 2,500 to 4,500. Approximately 45% of the 4,500 restaurants would be situated in third to fourth-tier cities.
  • In February 2017, Beijing-based Hejun Vanguard Group filed two complaints against McDonald’s China claiming that the  CITIC/Carlyle Group deal would negatively impact 120,000 Chinese employees of the fast-food giant, and that McDonald’s itself failed to properly register all of its restaurants in China.
  • In January 2017, McDonald’s announced it would sell 80% of Chinese operations (including Hong Kong). As a result of the US$2.08 billion deal, China’s CITIC will have a 52% stake while USA’s Carlyle Group will have a 28% stake. McDonald’s will retain a 20% stake.
  • In December 2016, McDonald’s selected USA’s Carlyle Group and its Chinese partner CITIC Group to purchase its franchises in mainland China and Hong Kong for approximately US$2 billion. The bidding prices for McDonald’s China fell roughly from US$3 Billion to US$2 Billion after McDonald’s decided to retain a 25% stake. McDonald’s also decided to not sell its South Korean fast food outlets. During the same month, McDonald’s announced plans to begin online-to-offline (O2O) strategy to allow customers to digitally order, pay, and customize their meal. The pilot phase of the O2O strategy will cover 1,000 restaurants (~40% of its restaurants) located across 13 Chinese cities.
  • In October 2016, Wumart’s bidding partner, the California-based private equity firm TPG Capital, exited the bidding process for McDonald’s China. The remaining bidders included Bain Capital and Green-Tree Hospitality (partners), Carlyle Group and CITIC Group Corp. (partners), Wumart Stores Inc. (former partner of TPG Capital), and Beijing Sanyuan Group (see  Beijing Capital Agribusiness Group).
  • In June 2016, McDonald’s Corporation was exploring selling its mainland Chinese and Hong Kong stores. Potential bidders include Bain Capital, TPG Capital, Carlyle Group, Beijing Capital Agribusiness Group, and GreenTree Hospitality.
  • In March 2011, Carlyle formed, Maritime Ventures, a new joint venture with Tiger Group Investments to acquire more than USD 5 billion in container, dry bulk, tanker and other shipping vessels. Partners in the joint venture also included the Seaspan Corporation, the Washington Family, Gerry Wang and Graham Porter.
  • In July 2010, Carlyle acquired a 13.6% (USD 155 million) stake in China Fishery’s, a Hong Kong-based supplier of fish products to the global market and animal protein supply chain. Also in July 2010, Carlyle acquired an 11.3% stake (USD 178 million investment) in C.P. Pokphand Co., from Thailand’s largest agribusiness conglomerate Charoen Pokphand Group (CP Group). The Hong Kong-based C.P. Pokphand Co. is one of China’s largest livestock and aqua feed producers.
  • In October 2009, Carlyle acquired a 16.5% (USD 15 million) stake in China Agritech. The Beijing-based China Agritech is a developer, manufacturer and distributor of liquid and granular compound organic fertilizers.
  • In September 2009, Carlyle acquired a 17.3% stake in Yashili, a Guangdong-based company and one of China’s largest infant formula companies. In July 2010, Carlyle’s share in Yashili grew 29.2%, but fell to 24.4% in November 2010 after Yashili successfully completed an IPO, which diluted Carlyle’s ownership stake.
  • In January 2008, Carlyle acquired an 11% stake (USD 55 million) in China Forestry Holdings, one of the three largest plantation forest operators in China. China Forestry manages and develops sustainable forests for harvesting and sales.
  • Founded in 1987 and headquartered in Washington D.C., The Carlyle Group (NASDAQ:CG) is a private equity firm.

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