Anchorage Capital bites into Burger King

The buyout of Burger King's New Zealand operations is the private equity industry's latest interaction with the fast food chain.

Anchorage Capital Partners has acquired all of the New Zealand operations of hamburger restaurant Burger King from its two local owners, Dennis Jones and Mark Backhaus.
Financial details were not released, though the private equity firm targets struggling or bankrupt companies with enterprise values between A$50 million ($44 million; €30 million) and A$150 million.

Burger King’s New Zealand franchise presently has 71 outlets. Anchorage plans to improve the fast food chain's existing network over the next few years, according to Mark Bayliss, an Anchorage partner.

The transaction, which used “a sensible amount of leverage”, makes Bayliss chairman of the company’s board and also gives the firm two additional board seats.

Burger King: buyout favourite

The investment was made out the firm's debut fund, which held an A$100 million first close in August and plans to hold a final close on A$200 million in the next six months, said Bayliss. The fund will invest up to 30 percent of its capital in Southeast Asia and up to 70 percent in Australia and New Zealand. 

The firm particularly likes well known brands with strong market positioning, Bayliss added.

This is not Anchorage’s first investment in the food sector. The firm's A$35.5 million in Golden Circle, a Brisbane-based food manufacturer, achieved a gross internal rate of return of 129 percent and 2.5 times multiple when Golden Circle was sold to Heinz.

It is also not the first time the Burger King franchise has become a private equity target. TPG, Bain and Goldman Sachs have received a steady revenue stream since purchasing Burger King's US operations for $1.5 billion in 2003. The trio have have steadily pared down their ownership stake after the company's public listing in 2006, which raised $425 million.