Yum Brands, owner of popular food chain restaurants KFC and Pizza Hut, said on Friday that it would sell a minority stake in its China business to Chinese investment firm Primavera Capital and an affiliate of Alibaba Group Holding, Ant Financials.

Reuters reported that the deal would offer both Primavera Capital and Ant Financials a combined stake of between 4.3 percent to 5.9 percent in Yum China for $460 million.

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Primavera will put in $410 million, while Ant Financial will pitch in $50 million in the deal. Both investors would be issued warrants to buy an additional 4 percent stake in Yum China in two installments at valuations of $12 billion and $15 billion respectively, the company said on Friday. The deal also includes a clause that bars Primavera and Ant from raising their stake in Yum China beyond 19.9 percent.      

Primavera and Ant Financial would purchase shares at an eight percent discount on the average Yum stock price between 31 days and 60 days after they are distributed to Yum Brands' shareholders.  

The deal comes as Yum Brands prepares to spin-off its China business later this year. The company announced its plan to spin off its China business in October last year in a bid to steam off its growing loss. Although Yum Brands is still the largest fast-food chain in China, over the years it has lost major ground to McDonald's Corp and other local rivals.

The series of food scandals in recent years coupled with sluggish business has taken a heavy toll on its business. Although recent quarterly results showed improvement in performance, results were far from convincing enough. Yum Brands is expected to spin off its Chinese business on October 31.

TagsYum! Brands, Yum Brands China, Yum China, KFC and Pizza Hut