Portfolio
Nature of Business
Founded in 1999, Little Sheep is China’s leading hot pot restaurant chain with branches throughout Asia and internationally. It operates company-owned and franchise restaurants specialising in Mongolian-style hot pot cuisine throughout China and Hong Kong as well as Macau, Japan, the US, Canada and Indonesia. The company differentiates itself from other hotpot restaurants by offering high quality Mongolian mutton cooked in a “special recipe” soup base which was created by its founder.
Investment Overview
In June 2006, 3i invested US$20 million in the company - the first foreign private equity investment in a Chinese restaurant chain. We took an active role in supporting Little Sheep’s growth both within China and internationally, advising on Little Sheep’s strategic focus on company-owned restaurants, developing its franchise model and aligning standards. This also created operational efficiencies and improved quality control, customer service and restaurant design, which all have significantly enhanced Little Sheep’s brand image over the last few years.
Additionally, we leveraged our international network within the consumer sector to introduce two independent directors with extensive track records in food service retail. The introduction of Yuka Yeung, the former CEO of KFC’s Hong Kong master franchisee, was vital to improving the franchise model and upgrading operational capabilities. He subsequently went on to join Little Sheep as COO. We also introduced Nish Kankiwala, the ex-President of Burger King International to identify the right balance between international expansion and the considerable opportunities in the domestic market.
Finally, we played a pivotal role in supporting Little Sheep’s highly successful IPO, with the company listing on the Hong Kong Stock Exchange on 12 June 2008, valuing Little Sheep above US$420 million. We retained a minority share. In March 2009, we fully divested our stake in Little Sheep to Yum! Brands Inc, bringing a successful three year partnership to a close. During the time of our investment, the Group reported a 148% increase in revenues and a 105% rise in profits, demonstrating the growing success of the brand concept and innovation.
