UPDATE 1-Unitas buys Carlyle stake in China food chain-source

Tue Jan 31, 2012 10:11pm EST

* Unitas buys majority stake in Babela Group for $40 mln

* Choppy IPO mkts lead to increasing secondary sales in Asia

* Unitas to invest more capital, use Babela for acquisitions

By Stephen Aldred

HONG KONG, Feb 1 (Reuters) - Private equity fund Unitas Capital has acquired Carlyle Group's stake in China restaurant chain Babela Group, said a source familiar with the matter, in a small deal but one that underscores the tough exit conditions for private equity investors.

Asia-based Unitas said on Wednesday it had acquired a majority stake in Babela, which owns three restaurant brands in China, for $40 million. The firm did not disclose the names of the investors.

Unitas' acquisition of the stakes of other investors comes as choppy IPO markets are blocking a natural exit route for private equity firms in Asia. Industry insiders say capital markets conditions are generating increased secondary sales, with private equity funds selling stakes to other firms to generate liquidity.

Further details of the transaction in privately-held Babela were not disclosed.

Carlyle, which invested in Babela in 2007 through one of its growth capital funds, declined to comment.

Unitas, originally founded by J.P. Morgan Partners Asia in 1999, now controls Babela's board, said the source, who was not authorised to speak to the media.

Unitas partner Jay Lee, a former senior executive of global quick service restaurant chain Yum!, will work with the firm's founder Chen Xing Wei, to develop Babela's brands, Unitas said.

Unitas said it plans to use Babela investment to buy other restaurant brands in China. Babela's brands in China are Babela, an Italian-themed casual dining chain of more than 120 stores in Shanghai and Beijing, as well as in tier two and tier three cities, Bamboo Bifengteng, a Cantonese style casual dining chain in Shanghai and Beijing, and Aha!, a Taiwanese style dessert chain.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article