Carlyle (CG.O) may be lagging its peers in the United States. But in China, at least, the buyout firm is finishing a meal that will be hard for others to find. McDonald’s (MCD.N) has agreed to supersize its menu in the People’s Republic by repurchasing Carlyle’s 28% stake in its business there, valuing the operations that include Hong Kong and Macau at $6 billion, per Reuters. That’s less than the private equity outfit run by Harvey Schwartz was hoping for, but is tasty enough.
In fact, the internal rate of return works out to a whopping 45%, a source told Breakingviews. The unit was valued at $2.6 billion in 2017 when Carlyle teamed up with a consortium run by state-backed Citic (0267.HK), which bought a further 52%, leaving McDonald’s with the remaining 20%.
Given geopolitical tensions and China’s weak economic growth, Carlyle has done well to secure a hassle-free exit. The deal is, however, unlikely to be a playbook for buyout firms in the world’s second-largest economy, as foreign companies are generally cautious to double down. It does, at least, free up Carlyle to focus on what to do with other investments in the country – not least TikTok owner ByteDance and Jack Ma’s Ant Group. (By Anshuman Daga)
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