China's Chamate Raises $23 Million

SHANGHAI (Reuters) – Chinese fast-food restaurant chain Chamate will receive a combined $23 million in venture capital funds from foreign investors, including Oak Investment Partners and IDGVC, ahead of a planned overseas listing, a financial source involved in the transaction said on Thursday.

The third round of private fund-raising for Chamate, whose major shareholders include Taiwan food company Ting Hsin International Group, will be the last round ahead of an overseas listing, said the source, who declined to be identified because he was not authorised to speak to the media.

Joseph Chan, chief finance officer, confirmed the size of the fund-raising but declined to comment further before a company statement could be made in the next few weeks.

Other investors included Granite Global Ventures and SIG Asia Investments, said the source, adding that only Oak would be a new investor in Chamate.

Although the deal has been closed, relevant parties still need to finish their legal work and all the money is expected to reach Chamate's account within a few months, said the source.

“Chamate has become a very mature project and its prospect for an overseas IPO plan is so clear for Chamate that it is popular with venture capital funds naturally,” the source said.

Last November, Chan told Reuters in an interview that Chamate, which is well known for its Chinese food and drinks, such as small hot pot with rice and Taiwan milk tea, was considering an initial public offering in the United States, as it aims to boost revenues more than 50 percent a year.

Chamate may list abroad as early as 2010, Chinese media have reported, although the company has not given a timeframe or named underwriters or the size of its planned.

Chamate is among a growing number of companies serving Chinese-style fast food in China's 200 billion yuan ($29.25 billion) market, where the biggest players are U.S. companies such as McDonald's (MCD.N: Quote, Profile, Research, Stock Buzz) and Yum Brands Inc (YUM.N: Quote, Profile, Research, Stock Buzz), which owns KFC and Pizza Hut. Most of the funds raised from the third round will be invested in network and staff expansion, said the source. Chamate already has solid coverage in top Chinese cities such as Shanghai.

Chan told Reuters last November that Chamate plans to increase the number of its outlets five-fold to 250 by 2011, from about 50 in 2007, which would help propel sales. ($1=6.837 Yuan)

By George Chen
(Additional reporting by Samuel Shen; Editing by Ken Wills)