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HONG KONG, Nov 11 (Reuters) - Private equity firm Actis said on Tuesday it had paid $50 million for a majority stake in Chinese hot pot chain Xiabu Xiabu, in a bet that affordable and fast food can withstand the country’s economic slowdown.
Beijing based Xiabu, known formally as Xiabu Xiabu Catering Management Co Ltd, has 53 outlets in Beijing, and aims to reach 60 by the end of 2008, Actis said in a statement.
The private equity firm said it plans to triple the number of outlets over the next three years, with Xiabu continuing to own its own stores.
“Xiabu is a great example of a business that will do well in any economic environment,” said Actis’ China head Lim Meng Ann.
Private equity firms have shown an appetite for China’s hot pot industry, which serves the country’s huge consumer market and typically generates heavy cash flows.
Little Sheep (0968.HK), another Chinese hot pot company, raised $100 million in an initial public offering in June. At the time of the IPO, private equity firm 3i Group Plc (III.L) and Prax Capital held stakes in the company.
Xiabu restaurants employ no chefs and use a centralised kitchen, making it easy to expand the business, Actis said.
Actis has investments in Africa, China, India, Latin America, south and Southeast Asia.
Reporting by George Chen and Michael Flaherty; Editing by Jacqueline Wong