Tim Hortons China, a joint venture between Tims parent Restaurant Brands International Inc. and a private equity firm, is planning to go public on the Nasdaq stock exchange via a merger with blank-cheque company Silver Crest Acquisition Corp., U.S. regulatory filings show.
The special purpose acquisition company (SPAC) deal could value the Chinese subsidiary of the popular coffee shop chain at US$1.7-billion, including debt. The merger and subsequent public listing are expected to take place before the end of the year.
Tim Hortons China is owned primarily by Cartesian Capital Group, a global private equity firm headquartered in New York, which also has a significant stake in Burger King China. Other investors in Tims China – as it is colloquially known – include the venture capital firm Sequoia Capital China and the Chinese tech conglomerate Tencent Holdings Ltd.
Silver Crest raised US$345-million when it went public on the Nasdaq back in March, at the tail end of the SPAC craze that engulfed Wall Street for much of 2020. The company was founded by Chinese private equity firm Ascendent Capital Partners and, at the time, said it was seeking to acquire a company in the “high growth consumer and consumer technology sectors.”
An investor presentation, included as part of regulatory filings to the U.S. Securities and Exchange Commission, says current Tims China shareholders will roll over their equity into the newly formed company after the merger, and retain roughly 80 per cent ownership. Shareholders of the Silver Crest SPAC will own 16 per cent of the new company, while sponsors of the SPAC will have a 3-per-cent stake.
Tims China is run by Peter Yu, a managing partner and co-founder of Cartesian Capital. The company had just 34 Tim Hortons stores in China in 2019, but quadrupled its store count within a year. Capital raised from the public listing is expected to go toward further increasing the number of stores in China, from more than 200 currently to about 2,700 by 2026.
The coffee chain experienced declining sales in China in the first and second quarters of 2020, at the onset of the COVID-19 pandemic, but has since recovered, despite periodic lockdowns in various cities across the country. Revenue grew from roughly US$3.7-million in the first quarter of 2020 to approximately US$15-million by the first quarter of 2021. The company projects annual revenue of US$105-million by the end of 2021, and hopes it will grow to US$1.2-billion by 2026.
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