Hony signs $1.5bn Pizza Express buyout

China’s Hony Capital buys the popular restaurant chain from Cinven-owned Gondola Group

Hony Capital has agreed to acquire Pizza Express from its owner Gondola Group in a deal worth about £900 million ($1.5 billion; €1.1 billion), according to a statement. 

The sale comes just as the business opened its first restaurant in Beijing, already having 12 sites in Hong Kong and nine in Shanghai. Pizza Express operates 436 restaurants in the UK and 68 others internationally and Hony has plans to roll out the restaurant further across the UK and China in particular. 

Hony joins the growing number of Chinese buyers looking to Europe to buy assets with a view to expand them into China. The deal is the largest in Europe’s restaurant sector in the past five years, according to the firm.

It is unclear what exact stake the firm took in the business, but it said it will work with the Pizza Express management team to drive continued growth in the UK and internationally.

“Hony Capital is delighted to have acquired Pizza Express, a well-established and exciting brand. We have built a strong track record in helping Chinese enterprises to expand globally. With Pizza Express, we have the opportunity to leverage our local expertise to accelerate its growth in the Chinese market, as well as to continue to drive its business forward in the UK,” John Zhao, chief executive of Hony, said in a statement.

“Today’s acquisition of Pizza Express by Hony is a very positive development at an exciting time for the business.  Asia is a key part of our future growth strategy and Hony’s expertise in this region will be invaluable.  We are looking forward to working with them on this as well as our ambitious UK growth plans,” Richard Hodgson, chief executive of Pizza Express, added.

The Gondola Group is owned by UK-private equity fund Cinven, although it is unclear to what extent the deal represents an exit for the London-based firm.

Cinven privatised the Pizza Express franchise owner in 2007 in a €1.3 billion transaction, and has since grown the company’s EBITDA to about £90 million from £60 million, the statement from Hony said. Cinven was unavailable for comment at press time.

Cross-border transactions with China have become increasingly popular over the past five years, as companies target emerging market growth and China’s consumer potential.

Despite issues raised by critics of the trend, such as cash-flushed Chinese buyers overpaying for European assets or cultural difference between Western and Chinese investors and owners, firms have continued to raise money to invest both ways.

In June, Cathay Capital Private Equity raised €460 million towards a first close for its latest Sino-French fund, which is targeting €500 million, Private Equity International reported earlier.

Similarly, in May sovereign wealth fund China Investment Corporation and the Russia Direct Investment Fund agreed to raise a joint investment vehicle targeting $800 million to tap tourism and infrastructure opportunities in both countries.