Risk Capital serves up its late bid for Pizza Hut chain

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The Independent Online

The investment vehicle co-founded by Luke Johnson, the entrepreneur and former chairman of Pizza Express, has submitted a final-round bid to acquire part of Pizza Hut UK.

Mr Johnson's company Risk Capital Partners faces competition from at least two other private equity investors, including Rutland Partners and Leeds-based Endless, which also want to purchase Pizza Hut's restaurants in the UK.

The restaurant giant Yum Brands – which owns Pizza Hut, as well as the KFC and Taco Bell chains globally – put its 340 Pizza Hut branches in the UK up for sale this year by hiring PwC to run the auction. The accountancy company and the private equity firms declined to comment yesterday.

Yum wants to offload the casual dining business in Britain as it seeks to focus its capital expenditure on the fast-growing markets of Asia, Africa and Latin America.

Pizza Hut UK has struggled for much of the past decade, although it says it has seen an "encouraging" improvement in sales in the past 12 months, driven by an improve menu and staff training.

Yum is evaluating a number of final-round bids and is understood to be close to granting exclusivity to a preferred bidder to acquire Pizza Hut UK. Its owner is seeking a buyer for the restaurants to serve as a master franchisee, although its pizza delivery business of more than 320 outlets is not up for sale. Yum will retain the rights to the Pizza Hut UK brand, but is thought to have offered suitors the concession of not paying it a royalty for up to three years. A spokesman for Pizza Hut said: "We have received significant interest in the Pizza Hut dine-in business from several leading companies. Yum has narrowed this list down, and we have been in advanced talks with a small number of prospective investors."

Pizza Hut made a pre-tax loss of £22.19m for the year to 28 November.

Luke Johnson led the acquisition of Pizza Express in 1992, floated it and expanded the chain rapidly before stepping down as chairman in 1999.