By staff reporter Chen Qian

From Caijing Online

Chinese restaurant chain South Beauty Group has clinched a 300 million yuan investment from a private equity fund (PE) and a mainland investment bank, becoming yet another Chinese catering company to successfully lure investments despite the global credit crunch.

South Beauty announced December 15 that it had sold a combined stake of less than 10 percent in its Beijing South Beauty Food & Beverage Company to CDH Investments and China International Capital Corp. (CICC) in exchange for a 200 million yuan investment from CDH and 100 million yuan from CICC.

South Beauty’s other two brands LAN Club and SUBU will not be affected by the deal, according to the group.

Despite the global economic slowdown, PE investors are still interested in China’s domestic catering enterprises. According to statistics from industry website JinRong Street PE, from January to November, six Chinese catering enterprises have gained investments totaling US$ 232 million, including Beijing-based hot pot chain Xiabu Xiabu which gained $50 million from CDC Capital Partners in November. 

According to South Beauty, the company started to seek partners one year ago and was attracted by CDH’s experiences investing in dairy producer Mengniu, footwear retailer Belle and leading sport brand Li Ning.

No comment from CDH has been reached.

Zhang Lan, the company’s founder and chairman, said that the firm was not fund-raising because of capital shortages, but was aiming to introduce strategic investors to push forward the company's future development. The market had rumored earlier that South Beauty is planning a public listing, but the company hasn’t disclosed any timetable of the plan.

South Beauty is accelerating expansion in overseas markets. In 2007, the company inked deals with Air France and KLM Royal Dutch Airlines to provide inflight meals. The company is also actively seeking a partnership with the 2012 London Olympic Games.

Zhang Lan told Chinese financial website Hexun.com that the current financial crisis offered South Beauty an opportunity to further penetrate international markets as costs are declining.

The catering industry has reported little impact from the financial crisis. According to China’s Ministry of Commerce, sales in China’s hospitality and catering sector reached 1105.5 billion yuan for the first three quarters this year, a 24.8 percent year on year growth.

Research by Jingrong Street PE believes that PE investors’ increasing favor for China’s catering industry is mainly because the country’s policies of boosting domestic consumption is expected to continue.

Established in 2002, South Beauty operates 40 high-class restaurants in major cities across China. The company posted 650 million yuan revenue in 2007.

1 yuan = 14 U.S. cents