China's Hony ready to make more overseas deals after Pizza Express buy
After purchasing the British restaurant chain, founder John Zhao wants to cater to consumers in the mainland's burgeoning casual dining market
Beijing-based private equity group Hony Capital says it is ready to make more sizeable investments to feed the rapidly growing Chinese consumer market after stepping up its overseas buying spree with the purchase of British restaurant chain Pizza Express for £900 million (HK$11.8 billion) this month.
"Significant demand in China's rising middle-class market, coupled with the country's urbanisation plan, gives backing to the popularity of casual dining in first-tier and inland cities," Hony founder and chief executive John Zhao told the South China Morning Post.
Seeking merger and acquisition deals overseas has become increasingly important to the 11-year-old, Lenovo-backed buyout firm, underscoring its ambition to cater to Chinese consumers seeking a better quality life through everything from dining to electronic gadgets.
"Casual but classy dining experiences are missing in the mainland's eating-out market, which is hugely divided between fast-food chains and high-end cuisine," Zhao said.
"According to our estimates, revenues in China's casual dining market are expected to grow by 20 per cent a year, and could easily double their present size in four years."
Casual but classy dining experiences are missing [on] the mainland
Hony has invested heavily in state-owned firms on the mainland in the past but the Pizza Express deal is its first leveraged buyout in Europe, illustrating its acquisition of more savvy deal-making skills. Zhao, who started his career in the movie business, said such deals gave the firm more financial flexibility by allowing it to pay lenders with bonds instead of cash.