The Carlyle Group Invests US$21 Million in DIO F&B Group, a Chinese Restaurant Chain; Plan to Build 1,000 “DIO Coffee” Outlets Within Five Years

Shanghai, China – Global private equity firm The Carlyle Group today announced its US$21 million investment in DIO F&B Group, creating a strategic partnership with the Chinese food and beverage restaurant chain. The investment, funded by Carlyle Asia Growth Partners Group (CAGP), will support franchise expansion, staff training and brand building for one of China’s largest restaurant chains. This investment attests to CAGP’s ability to identify high-potential, grass-root business models through its extensive local presence and knowledge. Further financial details were not disclosed.

Launched in 2001, “DIO Coffee” is the primary brand under the group and has more than 300 chain restaurants in 23 provinces and cities across China. “DIO Coffee” has successfully combined the delicate leisure style of Asian pastimes and Chinese food with Western coffee culture, promoting a unique Chinese leisure lifestyle. It has received numerous industry honors including Top Leisure Dining Company and China’s Excellent Franchise Brand Award.

Post investment, CAGP will help DIO develop into a restaurant chain of international standards, including enhancing its governance structure, operations, strategic management and staff training. Both parties aim to expand “DIO Coffee” to 1,000 stores in China within five years and to build it into a prominent F&B brand nationwide.

“This alliance focuses on positioning DIO for its long-term future beyond mere capital raising. Together we will strengthen management, grow the brand and allocate resources effectively to ensure sustainable long-term growth,” said Wang Yangfa, President and Founder of DIO F&B Group. “With this partnership, our goal is to help shape China’s emerging leisure food and beverage industry.”

In 2006, after 16 consecutive years of double-digit growth, China’s food and beverage industry reached a historic milestone with annual revenue topping RMB 1 trillion. Rising domestic consumption will continue to be a major driver for this market, and franchises, as a favorable business model, are expected to see ongoing robust growth.

Mr. Wayne Tsou, Managing Director of The Carlyle Group and Head of CAGP, said, “DIO’s sustained development and stable operation inspired our confidence in the company’s adaptable expansion model and high growth potential. Carlyle will leverage its expertise in the consumer and retail industry and rich brand building experience to help DIO excel.

”As the Chinese economy continues to prosper, we strongly believe in the increasing importance of grass-root business models. Our ability to penetrate deep into many major local industries and segments as well as geographic regions in China will enable us to apply resources wherever opportunities appear.”

CAGP, one of the region’s largest growth capital platforms, manages three funds with an aggregate capital of more than US$1 billion. The group seeks out promising high-growth private companies with differentiating but proven business models across industries in China, India, Japan and Korea. Carlyle Asia Growth Partners III, a US$680 million fund raised in June 2006, has already committed nearly US$400 million to support more than 15 companies in more than 10 major sectors. Chinese companies account for more than 60% of the committed capital and portfolio of CAGP III.

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About DIO F&B Group
DIO F&B Group controls a series of enterprises including Suzhou DIO F&B Management Co. Ltd (DIO F&B), Anhui DIO Store Management Co. Ltd, and the DIO Manufacturing Center (which covers 20.6 hectares of land and has floor space of more than 26,000 square meters). The Group manages various projects, such as the brand management of DIO Coffee, DIO Chain Store Management division, DIO food processing, Zuoshuai Trading (Logistics), and the manufacturing of DIO-labeled furniture. Of these ventures, DIO F&B directly manages the DIO Coffee Shop and leisurely dining chain. Since its first shop opened in Shanghai in 2001, DIO Coffee has won the hearts of millions of consumers through its excellent quality of service, wide selection of fine food and beverage products, and comfortable cultural atmosphere provided in its shops. As a result, DIO Coffee has already spread to more than 20 provinces, autonomous regions and municipalities throughout China with more than 300 locations, and is ranked number one in the Top 100 Food and Beverage Companies in China. As China’s most outstanding franchise brand, DIO was chosen by China Chain Store and Franchise Association to represent China in an international franchise brand competition, where it won top honors. DIO also successfully participated in a collaborative effort to review national industrial standards, regulations and research papers, and spares no effort in further stimulating the healthy development of the industry. www.diocoffee.com

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