The Carlyle Group sold its minority ownership stake in the strategic partnership that handles McDonald’s business in and around China.
Carlyle and Chinese state-owned conglomerate CITIC Group joined forces in 2017 to acquire an 80% stake of the franchise rights of McDonald’s-owned Golden Arches Investments in mainland China, Hong Kong and Macau for up to $2.08 billion. CITIC Group subsidiaries CITIC Limited and CITIC Capital took stakes of 32% and 20%, respectively, which were rolled into Fast Food Holdings. Carlyle took a 28% stake, while Golden Arches Investments kept a 20% stake.
Carlyle acquired its stake via Carlyle Asia Partners IV (CAP IV), which closed in September 2014 with $3.9 billion in commitments. Carlyle established its presence in the Asia-Pacific region in 1998, and the CAP IV close brought the firm’s Asia buyout, growth, RMB and real estate funds to a total of $13.6 billion in assets under management.
Like its predecessor buyout funds, CAP IV targeted control and significant minority investments in established companies throughout the Asia ex-Japan region. Notable investments by the fund prior to the McDonald’s deal included Shanghai ANE Logistics; security services company ADT Korea; Chinese online classifieds operator Ganji.com; and Delhivery Private Limited, the largest third-party supply chain services provider in India.
In early 2020, right before the COVID explosion, CITIC Limited sought buyers for a 22% stake in the McDonald’s partnership. There were no takers. Earlier this year, Bloomberg reported that Carlyle and CITIC’s private capital unit, Trustar Capital, were working on a $4 billion deal involving a new investment vehicle.
On Monday, McDonald’s — as in the parent company — announced that it was acquiring Carlyle’s 28% stake, leaving the CITIC Consortium with a 52% majority stake. McDonald’s will remain a minority partner while increasing its stake from 20% to 48% ownership.
“Our strategic partnership with CITIC and Carlyle has been extremely successful in growing McDonald’s presence in the region since it began,” said Chris Kempczinski, McDonald’s President and Chief Executive Officer. He noted that the chain’s China presence has doubled to more than 5,500 restaurants since 2017, making it the company’s second largest market.
“We very much appreciate the strong partnership we have had with CITIC Capital and McDonald’s Corporation,” said X.D. Yang, chairman of Carlyle Asia. “Together, we transformed the business, accelerating its growth profile and revolutionizing its digital marketing and operational capabilities.”
The value of the deal was not disclosed, but Bloomberg pegged it at $1.6 billion, giving the firm a return of 6.7 times.
