KKR to acquire significant stake in V3, TWG Tea
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Private equity company KKR is to invest as much as S$500 million (US$366 million) into V3, the parent of cafe chain TWG Tea and massage chair retailer Osim, to fund regional expansion. In a deal which mixes equity and financing, KKR will take an unspecified “significant stake” in V3, which is effectively valued at S$1.7 billion. V3 is the company which resulted from last year’s restructuring of once-listed Osim International after plans for an IPO were shelved.
Keith Magnus, chairman of Evercore Asia, which advised V3 on the deal said that the investment by KKR represents a more than 50 per cent increase in enterprise value compared to when the group was taken private.
“This is a phenomenal premium for [Ron] Sim,” said Magnus.
Sim remains the chairman, chief executive and controlling shareholder of V3. Sim, who remains chairman, CEO and controlling shareholder of the business added in a statement: “I am extremely pleased to welcome KKR as a significant shareholder in V3. I am confident this investment will position the company for our next phase of growth, starting with the immediate expansion of TWG Tea in Japan and the US and of Osim in China.
“We would also be looking into M&A opportunities that are earnings accretive.”
V3 also owns the rights to retail GNC nutritional supplements in Singapore, Malaysia, the Philippines and Taiwan.
Sim says V3’s revenue cleared S$600 million last year and profit was also up.
Questions & Answers
Q.What is the primary purpose of KKR's investment in V3?
What is the primary purpose of KKR's investment in V3?
KKR's investment is intended to fund V3's regional expansion. Specifically, this includes the immediate expansion of TWG Tea in Japan and the US, and Osim in China. V3 also plans to explore earnings-accretive M&A opportunities.
Q.How has the enterprise value of V3 changed since it was taken private?
How has the enterprise value of V3 changed since it was taken private?
The investment by KKR represents a significant increase in V3's enterprise value. According to Keith Magnus of Evercore Asia, it is more than a 50 per cent increase compared to when the group was taken private last year.
Q.Which specific brands within V3 are targeted for immediate expansion?
Which specific brands within V3 are targeted for immediate expansion?
V3 plans for the immediate expansion of TWG Tea in Japan and the US. Also, the company intends to expand its Osim brand specifically within the Chinese market, utilising KKR's investment to achieve these goals.
Q.What other retail rights does V3 hold besides TWG Tea and Osim?
What other retail rights does V3 hold besides TWG Tea and Osim?
V3 also holds the retail rights for GNC nutritional supplements. These rights cover several key markets in Southeast Asia: Singapore, Malaysia, the Philippines, and Taiwan, diversifying V3's retail portfolio.
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