KFC China
Yum China will be listed on the New York Stock Exchange from November 1st.

Yum Brands Inc., owner of food brands KFC and Pizza Hut, will be selling $460 million worth of shares to Chinese investment firm Primavera Capital and an affiliate of Alibaba Group Holding Ltd., as Yum aims to spin-off its China unit.

Primavera Capital, run by former Goldman Sachs Group Inc. Greater China Chairman, Fred Hu, will be given a large stake in Yum’s Chinese business. The deal will also extend the reach of Ant Financial, the company that runs Alibaba’s Alipay mobile payments platform, to help its foray into the restaurant industry in China.

Both investors will be receiving warrants to be able to buy an additional 4 percent stake in Yum China, divided into two tranches with valuations of $12 billion and $15 billion, according to the company on Friday.

According to a Yum spokesman, proceeds from the deal will be used according to the needs of the future Yum China board of directors.

Yum has given signs that part of the money could go into the expansion further into China with the company aiming to almost triple the number of its restaurants to 20,000 in its trajectory last October.

Both KFC and Pizza Hut were able to gain much in serving the booming economy of China as the Chinese patrons headed to Western fast food restaurants that ensured them a higher level of service and perceived food safety.

In recent years, however, China has been facing some problems for its companies, including bird flu outbreaks and a scandal at one of the company’s minor meat suppliers.

Yum is also quickly losing market share to McDonald’s Corp., but even so, they still tenuously have a hold as the country’s largest fast food chain.

The move for the company based in Louisville, Kentucky to separate its business in China followed after one of its largest investors, Corvex Management, an activist hedge fund run by Keith Meister, pressured the company. Meister was able to increase pressure by being on Yum’s board.

The spinoff is expected to be completed by October 31. Yum China will be listed on the New York Stock Exchange the day after, according to the company on Friday.

The Chinese focused private equity firm, Primavera, will be investing $140 million while Ant Financial will be putting in $50 million. China’s sovereign wealth fund and KKR & Co., a New York private equity firm, were also looking to buy stakes in Yum China.

Hu, founder of Primavera, will be a member of Yum China’s board as a non-executive chairman.

Goldman Sachs is financial adviser, while Wachtell, Lipton, Rosen & Katz are legal adviser to Yum Brands and Yum China. Simpson Thacher& Bartlett LLP and Fangda Partners are legal advisers to Primavera and Ant.

Shares of Yum increased by 1 percent to $91.70 in early morning trading.