Little Sheep Case study
3i Group plc and Little Sheep*
Lily Fang
Roger Leeds
insead
School of Advanced International Studies, Johns Hopkins University
“Many people grow a company like raising a pig. The pig gets fat, you kill it and make money. I grow my company like raising a son. The average life of a restaurant is less than three years in China. I want Little Sheep to last a century.”
– Zhang Gang, Founder, Little Sheep Catering Chain Co.
“Helping a great business to realize its potential takes a lot more than just capital. It is ultimately about the people, thus your relationship with the management team and the sort of support you can provide, such as introductions to key industry expertise and relevant operational best practice, is very important.”
– Anna Cheung, 3i Partner, China
Executive Summary
In 2004, a large, well‑established global private equity firm invested in a rapidly growing Chinese restaurant chain that originated in Inner Mongolia, one of the country’s most remote regions. This case describes how and why an unlikely yet productive relationship was forged between these two firms, and the result of their collaboration. 3i, a highly respected global private equity firm with a 60‑year track record, first established an Asian presence in Hong Kong in
2001. Three years later, a rapidly growing restaurant chain called “Little Sheep” came to the firm’s attention. Due to its meteoric growth and national brand name recognition, Little
Sheep was very attractive to some prestigious international investors, who made offers of financing. The founder, however, favoured 3i over other prospective investors due to a strong belief that, in addition to its financing capability, the firm had the expertise and commitment to add value on a number of fronts that would strengthen the overall competitiveness and profitability of his growing company.
This story of 3i’s value‑creating contribution to Little Sheep is consistent with much of the private
Lily Fang
Roger Leeds
insead
School of Advanced International Studies, Johns Hopkins University
“Many people grow a company like raising a pig. The pig gets fat, you kill it and make money. I grow my company like raising a son. The average life of a restaurant is less than three years in China. I want Little Sheep to last a century.”
– Zhang Gang, Founder, Little Sheep Catering Chain Co.
“Helping a great business to realize its potential takes a lot more than just capital. It is ultimately about the people, thus your relationship with the management team and the sort of support you can provide, such as introductions to key industry expertise and relevant operational best practice, is very important.”
– Anna Cheung, 3i Partner, China
Executive Summary
In 2004, a large, well‑established global private equity firm invested in a rapidly growing Chinese restaurant chain that originated in Inner Mongolia, one of the country’s most remote regions. This case describes how and why an unlikely yet productive relationship was forged between these two firms, and the result of their collaboration. 3i, a highly respected global private equity firm with a 60‑year track record, first established an Asian presence in Hong Kong in
2001. Three years later, a rapidly growing restaurant chain called “Little Sheep” came to the firm’s attention. Due to its meteoric growth and national brand name recognition, Little
Sheep was very attractive to some prestigious international investors, who made offers of financing. The founder, however, favoured 3i over other prospective investors due to a strong belief that, in addition to its financing capability, the firm had the expertise and commitment to add value on a number of fronts that would strengthen the overall competitiveness and profitability of his growing company.
This story of 3i’s value‑creating contribution to Little Sheep is consistent with much of the private