Hong Kong-based Unitas Capital has appointed Deutsche Bank to lead the sale of South Korean chain of convenience stores, Buy the Way, a source close to the buyout firm has confirmed.
Various media reports this week say a potential sale could fetch up to $500 million for the firm, which bought the company in 2006 from Orion Corporation, a Korean media and entertainment company. The financial details of the transaction were not disclosed at the time, although it has been reported that Unitas paid $200 million for the company.
Buy the Way: On the block
Buy the Way is Unitas’ only active investment in South Korea. At the time of the initial investment it had 980 stores across Korea selling confectionary, beverage and fast-food items in densely-populated office, residential, entertainment and educational areas mostly in the metropolitan of Seoul. The firm worked with Convenience Retail Asia, a Hong Kong retailer, to develop the company’s network of stores and business model. The company now has 1400 stores nationwide.
South Korea has previously proved fertile territory for Unitas, which began life as the Asian private equity arm of JPMorgan Partners, gaining independence and renaming itself as CCMP Capital Asia in 2005, before finally re-branding as Unitas Capital in December last year.
Previous investments in Korea have included Mando Corporation, an auto-parts manufacturer, in which it acquired a 72 percent stake in 2000 alongside Affinity Equity Partners for $446 million. The sale back to the original vendor, Korean construction group Halla Engineering and Construction, in January 2008 valued the company at an enterprise value of approximately US$1.43 billion, netting the two firms a 5x return.
Another Unitas investment in Korea was confectionary and frozen food manufacturer Haitai Confectionary & Foods, the country’s second largest maker of confectionary. Unitas bought into Haitai alongside CVC Asia Pacific and UBS Capital Asia Pacific in 2001 for $370 million, selling it to rival confectioner Crown Confectionary in 2005 for $500 million and generating returns of 3x.
However, not all of North Asia has proved as successful for the firm, which closed its Tokyo office earlier this year. At the time, Andrew Liu said the firm would continue to invest in the country, but, “like many other firms”, had “concluded it makes better sense to concentrate resources on the core markets of greater China, Korea and Australasia”.
Unitas Capital closed its most recent fund, CCMP Capital Asia Opportunity Fund III, on $1.2 billion in December 2008, falling shy of its original target of $2.5 billion. It currently has around $4 billion in assets under management and ranked 13th in PEI Asia’s inaugural PEI Asia 30 in June, a ranking of Asia’s 30 largest private equity firms according to amount of capital raised over the last five years.