Yum Brands has added some spice at a price. The KFC and Pizza Hut owner is selling a slug of its China business to Alibaba's mobile-payments affiliate and a private-equity firm run by former Goldman Sachs China Chairman Fred Hu. They bring valuable tech nous and connections. It's a better deal than usual for so-called cornerstone investors, but may pay off for Yum's upcoming spinoff.
Hu's Primavera Capital and Jack Ma's Ant Financial, which operates Alipay, are investing $410 million and $50 million, respectively, in Yum China. In return, they'll together receive between 4.3 percent and 5.9 percent of the company. That implies a wide valuation of between $8.5 billion and $11.6 billion for the enterprise. Their final stakes will depend on where Yum China's shares trade when they are listed separately, a flotation planned for next month.