Singapore's Temasek Holdings and a consortium that includes China Investment Corp (CIC) and KKR & Co have advanced to a second round of bidding for a minority stake in Yum Brands' China unit, people familiar with the matter told Reuters.

Another private equity-backed consortium has also moved to the second round, they said, although its identity could not be immediately confirmed.

US-based Yum Brands, owner of the Pizza Hut and KFC fast food chains, aims to spin off its 7,205 China restaurants by the end of 2016, amid pressure from activist investor Corvex Management, whose founder, Keith Meister, is on Yum's board.

The second round of bids for the stake of around 20 percent are due by the end of this month, the people said, declining to be identified.

Yum's entire China unit is valued at between $8 billion and $11 billion, based on its core earnings of about $1 billion, the people added.

Some bidders are keen to buy control of the China business, the people said, but they noted that Yum is sticking to a minority sale because it is more tax efficient.

It is not clear if the bidders will pursue a transaction if Yum does not offer a controlling stake, they added.

Yum, still the largest fast food chain in China, has been losing ground to McDonald's Corp as they both strive to revive flagging sales in the teeth of growing competition from local rivals and a slowing economy.

In the latest quarter, Yum's China sales grew faster than Wall Street estimates, raising hopes that Yum's profit engine is showing signs of stability after many quarters of disappointing sales.

Reuters