Billion-Dollar Bubble Tea: Gong Chas Anticipated $2.5B Sale Stirs Interest Among Top Private Equity Firms
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Gong Cha, the renowned bubble tea chain, has reportedly piqued the interest of potential buyers, including private equity companies Bain Capital and General Atlantic. The anticipated deal, initiated by the current owner and Boston-based private equity firm TA Associates, is projected to be worth up to $2 billion.
Unlocking the Full Potential of Gong Cha
JPMorgan handles the sale proceedings on behalf of TA Associates, with final bids expected by mid-June, according to an insider. Gong Cha’s annual earnings, before considering factors such as interest, tax, depreciation and amortisation, exceeds $70 million. Given the company’s valuation of $2 billion, the core earnings multiple is nearly 30 times. However, potential buyers may be more inclined to propose a lower multiple.
Despite requests for comments, all parties involved – TA Associates, Gong Cha, Bain Capital, General Atlantic, and JPMorgan – have chosen to remain silent on the matter.
Gong Cha, established in Taiwan in 2006, has evolved into one of the largest tea brands across the globe. It has a vast chain of nearly 2,200 stores spread across 32 markets, both company-owned and franchisee-operated.
The Impressive Footprint of Gong Cha
The bubble tea chain offers a variety of cold beverages, including milk tea and fruit tea, through its outlets located in Asia, North America, Europe, and the Middle East. Last year, Gong Cha reported a 14% increase in group revenue, hitting $217 million, primarily driven by growth in Japan and South Korea.
In addition, Gong Cha made its presence known in five new markets last year, entering Thailand, Colombia, and Ecuador, and making strategic acquisitions of master franchisees on the east and west coasts of the United States. TA Associates, a company known for investing in growth opportunities, became a stakeholder in Gong Cha in 2019.
Questions & Answers
How much does TA Associates expect to earn from the sale of Gong Cha?
Answer: The sale of Gong Cha is projected to fetch up to $2 billion.
How many locations does Gong Cha have worldwide?
Answer: Gong Cha has nearly 2,200 locations spread across 32 markets worldwide.
When did TA Associates invest in Gong Cha?
Answer: TA Associates invested in Gong Cha in 2019.