Boyu Capital plans to introduce Tencent (00700) and GIC to participate in the equity transaction of Starbucks Corporation (SBUX.US) in China.

According to informed sources, Boyu Capital is considering bringing in Tencent (00700), the Government of Singapore Investment Corporation (GIC), and other potential institutions as limited partners to jointly acquire equity in Starbucks Corporation (SBUX.US) China business. The source mentioned that the private equity firm has agreed to acquire up to 60% of the business and plans to drive growth in its second largest market globally by expanding its store network in third and fourth-tier cities. In addition, Boyu Capital also plans to add stores in tourist attractions, subway stations, and airports. As the information has not been made public, the undisclosed sources mentioned that negotiations are still ongoing, and an agreement may not ultimately be reached. Boyu Capital has not responded to requests for comments. Representatives from Starbucks Corporation, GIC, and Tencent have all declined to comment. Facing fierce competition from local rivals, Starbucks Corporation has become another foreign retail company boosting its China business through local partners. Just last week, Restaurant Brands International, Inc. (QSR.US) reached an agreement with asset management firm CPE to sell a controlling stake in its Burger King China business. Since entering the Chinese market in 1999, Starbucks Corporation has opened around 8,000 stores and plans to expand to 20,000. Its China headquarters are located in Shanghai. In addition, according to informed sources, Boyu Capital is in talks with several banks for a loan of around $1.4 billion to support this acquisition transaction of the Starbucks Corporation China retail business. The estimated valuation of Starbucks Corporation's China retail business is around $4 billion. The joint venture agreement between Starbucks Corporation and Boyu Capital is expected to be finalized in the second quarter of next year.