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Boyu Capital, Carlyle Group Inc., EQT AB, FountainVest Partners, KKR & Co., Hillhouse Investment and Primavera Capital are among the private equity firms invited to participate, along with tech giants JD.com Inc. and Tencent Holdings Ltd., the people said, asking not to be identified discussing private information.
The shortlisted firms will be given access to the coffee chain's China financials so they can evaluate and prepare bids in the coming months, the people said.
Fresh backing and more local expertise could help Starbucks expand its store count and further develop its supply chain in China, as well as enhance mobile platforms and brand strategies for Chinese consumers, according to the people.
The search for a partner in China is 'not about capital,' Starbucks Chief Executive Officer Brian Niccol said on a July 29 earnings call with analysts. 'What this is about is how do we ensure that the Starbucks brand is in a much better place in the future.'
Niccol has previously said the China business could grow to 20,000 stores from roughly 7,800.
China is the Seattle-based chain's second-biggest market, but Starbucks has fallen behind local rivals such as Luckin Coffee Inc., which have boomed with much cheaper alternatives and frequent product launches.
Starbucks has started to follow suit by incorporating lower-priced and tailored offerings such as fruit teas and sugar-free alternatives to its China menus. And there are signs of some improvement, with same-store sales rising in the latest quarter for the first time since the end of 2023, the company said this week.
The process to introduce new backers in China attracted more than 20 potential investors in total, Niccol said on the call with analysts. Starbucks wants to retain a 'meaningful' stake in the business, he said.
Bloomberg News first reported in May that Starbucks was reviewing its China operations. By July, the company had received proposals from prospective investors with an eye on taking a controlling stake in the business. The company has said it isn't considering a full sale.
Deliberations are ongoing and may not lead to a transaction. Other industry and financial investors could also join at later stage when talks are more advanced, the people said.
Starbucks declined to comment. Representatives for EQT, FountainVest, Hillhouse, KKR and Primavera also declined to comment. Boyu, Carlyle, JD.com and Tencent didn't respond to requests for comment.
--With assistance from Echo Wong, Zheping Huang, Bei Hu and Claire Che.
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