*

Qatar Investment Authority committed biggest amount to

become

anchor investor

*

Other investors in fund include Chinese sovereign fund

CIC,

yuan-denominated investors

*

McDonald's China says goal to reach 10,000 restaurants

remains

unchanged

By Kane Wu

HONG KONG, Nov 21 (Reuters) - Trustar Capital has raised

$1 billion for a continuation fund that will hold the Chinese

private equity firm's controlling stake in McDonald Corp's

operations in mainland China and Hong Kong, two sources

with knowledge of the matter said.

A continuation fund is a new vehicle created by a private

equity (PE) firm to transfer holdings of existing investments.

The concept has gained traction in Asia in recent years as PE

firms' exit from companies via IPOs became challenging.

Sovereign wealth fund Qatar Investment Authority (QIA) has

committed the biggest amount to become the anchor investor in

Trustar's continuation fund, said the sources, who declined to

be named as the information is confidential.

Other investors in the $1-billion continuation fund included

Chinese sovereign fund China Investment Corp (CIC) and a number

of Chinese yuan-denominated investors, they added.

McDonald's China said the firm was pleased to see Trustar

has increased its investment in McDonald's China, based on "a

strong confidence in the growth prospects" of the Chinese

economy, as well as the company's development potential.

The company said its goal to reach 10,000 restaurants

remains unchanged. "The transaction further simplifies the

ownership structure ... with the support of our shareholders, we

will continue to drive the future growth of our business."

Formerly known as CITIC Capital, Trustar transferred its

equity interest in McDonald's China from its private equity fund

into the continuation fund, which will hold 52% of the

operations, said the sources.

Trustar didn't immediately respond to a Reuters request

for comment. CIC and QIA declined to comment.

The capital raised for the continuation fund will be used to

provide an exit to some investors in Trustar's private equity

fund, known as limited partners, said the two sources and

another person with knowledge of the matter.

In 2017, Chicago-based McDonald's sold an 80% stake in its

Chinese operations to a group that included CITIC Ltd ( CTPCF ),

its investment arm CITIC Capital, and Carlyle Group ( CG ) for

up to $2.1 billion.

The two CITIC ( CTPCF ) entities owned 52% jointly in that deal.

CITIC Ltd ( CTPCF ) said last month it had agreed to sell its 19.23%

stake in the company to a unit of Trustar for $430.3 million,

fully exiting the business at a valuation of around $2.2

billion.

In comparison, Carlyle announced a year ago the sale of its

28% stake back to McDonald's, which valued the China business at

$6 billion, Reuters reported at the time. After the repurchase,

McDonald's raised its stake to 48% in the China business.

The closure of the continuation fund valued McDonald's

mainland China and Hong Kong operations at the same level as the

CITIC's ( CTPCF ) deal last month, said the two sources.

Trustar's closing of the continuation fund comes as PE firms

and their investors look for alternative liquidity options amid

volatile market conditions, geopolitical tensions and China's

tightening of IPOs.

Investors in the continuation fund will also commit capital

to a new private equity fund Trustar is raising, said the

sources.