Financial details of the transaction were not disclosed, but the management team will be a meaningful minority shareholder along with Allegro, Chester Moynihan, the firm’s founding partner, told sister publication Private Equity International.
Allegro, which manages over A$600 million ($460 million; €410 million) of assets, invested in Pizza Hut through Allegro Fund II, its A$180 million vintage-2014 vehicle, which is about 40 percent deployed.
Investors in the fund include New Zealand’s Accident Compensation Corporation and some Australian superfunds, according to PEI data.
Moynihan said the fund’s deal pipeline is “stronger than he’s ever seen it”.
“We’ve still got a fair amount of dry powder to deploy and that’s what we’re focused on, and we’re seeing good runway to deploy the fund.” The firm is also potentially progressing an exit in one of its portfolio companies, he added.
Allegro invests primarily in the mid-market turnaround space in Australia and New Zealand. The firm has made investments in several companies, including flooring retailer Carpet Court, bus-body building company Custom Bus, and transcontinental rail service Great Southern Rail.
Moynihan said the Pizza Hut transaction represented an innovative quick service restaurant investment model: “Our immediate focus will be strengthening the network of Pizza Hut stores across Australia through increased investment, resources and management focus.”
“We’re investing into the business to drive the growth, bringing in expertise from our management team and we’re on the ground – it’s a good way for Yum! to get help to drive its business which has a strong brand but needs some reinvigoration,” he said.
Allegro is bringing in McDonald’s Corporation senior executives Peter Rodwell, Lisa Ransom and Chris Leslie, who will serve as executive chairman, chief executive and chief operating officer, respectively/
Yum! Brands, the owner of KFC and Pizza Hut, has also recently struck a deal to sell a $460 million stake in its Chinese franchise to Beijing-based private equity firm Primavera Capital and Ant Financial, Alibaba’s payments unit.
Under the terms of the agreements, Primavera and Ant Financial will invest $410 million and $50 million, respectively, in Yum China.
YumChina’s spinoff is expected to be completed on 31 October 2016 and the company will start trading on the New York Stock Exchange on 1 November, the firm said in a statement.