By Yantoultra Ngui

KUALA LUMPUR, April 30 (Reuters) - Malaysian's QSR

Brands, the operator of fast food chains KFC and Pizza Hut in

Southeast Asia, has indefinitely shelved plans to list on the

local stock exchange as its businesses have been affected by

boycott campaigns over Israel's military offensive in Gaza, two

sources familiar with the matter told Reuters.

Plans for QSR to hold an initial public offering that could

raise up to $500 million have repeatedly stalled since 2017 due

to, among others, worries that poor economic conditions could

pose risks to its valuation.

Such concerns have grown amid an ongoing boycott campaign in

Muslim-Majority Malaysia, a staunch supporter of the

Palestinians, against some Western fast food brands over their

perceived links to Israel, the sources said.

Malaysia's largest pension fund, the Employees Provident

Fund (EPF), and European-based private equity firm CVC Capital

Partners have paused the sale of their combined 44% stake in QSR

due to businesses affected by the boycott campaigns, according

to the two people, who declined to be named due to sensitivity

of the matter.

CVC has been considering selling its stake in QSR since last

year, following the IPO delays, Reuters reported earlier this

month.

CVC declined to comment.

QSR, EPF and QSR's largest shareholder - Malaysian state

agency Johor Corp - did not respond to requests for comment.

QSR said this week KFC Malaysia has temporarily closed

outlets in the country due to challenging economic conditions.

Local media reports said the closures were a result of the

boycott campaign.

Other major fast food brands such as McDonald's and

Starbucks ( SBUX ) have also been targeted by boycotts in

Malaysia, despite attempts by the operators of their franchises

to distance themselves from the Israel-Hamas war.

(Writing and additional reporting by Rozanna Latiff; Editing by

Christina Fincher)