Kungfu Catering Management Co Ltd, the operator of the Zhen Gongfu-branded Chinese-style fast food chain, said yesterday two venture capital funds will invest a total of 300 million yuan (US$40 million).

 

The Guangdong Province-based private company has signed agreements with international equity fund Capital Today Group, and Zhongshan, Guangdong Province-based Lian Dong Investment Corp last year to fund expansion and human resources training, according to Cai Dabiao, president and director of Kungfu.

 

"The deal is being processed for government approval, which is expected to be completed as early as next month," Cai added.

 

He declined to disclose the percentage stake that would be taken by the two VCs, except to say Kungfu would insist on a controlling stake.

 

Cai also dismissed earlier market speculation that it would launch an initial public offering on the Hong Kong market in the fourth quarter this year.

 

"We don't have a strong desire to list right now," Cai said, "We will consider it at least two to three years later, with priority given to the (Chinese) mainland bourse."

 

Zhen Gongfu, which features a portrait of Chinese kungfu star Li Xiaolong as its logo, was founded in 1994, and offers mainly steamed Chinese food.

 

The firm plans to increase its store number from 200 now to 250 by the end of this year. Next year another 130 stores will be built nationwide and there are plans to have a total of 2,000 globally by 2012 as the firm has ambitions to take on international catering conglomerates like Yum! Inc and McDonald's Corp.

 

All the stores are wholly-owned by the company presently and franchise business operations will not be launched in the short term.

 

Zhen Gongfu yesterday opened its 200th store and the 10th in Shanghai on Nanjing Road East as the Yangtze Delta region will be its new focus for development after southern China.

 

(Shanghai Daily October 26, 2007)