Affinity picks Goldman as adviser for Burger King Korea, Japan sales

Affinity Equity Partners has chosen Goldman Sachs as its adviser for the planned sale of its entire stakes in Burger King’s operations in Korea and Japan – a deal estimated at 700 billion won ($589 million).

According to investment banking sources on Tuesday, the Asia-focused private equity firm recently picked the US investment bank as its sale manager for the deal, and plans to send an investment teaser to potential buyers in January.

Up for sale is the 100% stakes in Burger King Korea and Burger King Japan owned by Affinity Equity Partners, which wants to fetch around 700 billion won from the sale, the sources said.

The simultaneous purchase of the franchise restaurants in Korea and Japan could help the buyer cut operating costs, they said.

In 2016, the PEF acquired 100% of the fast-food chain’s Korean operations for 210 billion won from Seoul-based VIG Partners, tapping its fourth Asia fund that raised 4.8 trillion won in 2014.

The following year, it took over the management rights of Burger King's Japanese operations from Restaurant Brands International Inc., a Canadian American holding company that runs the fast-food chain’s global operations. At the time, Affinity also purchased the entire stake in Burger King Japan from Korea’s Lotte Group for about 10 billion won.

Burger King’s owner, RBI, also runs other major fast-food brands such as Popeyes and Tim Hortons.

BURGER KING KOREA OUTLETS OUTNUMBER THOSE OF McDONALD’s

Since its acquisition of Burger King Korea, Affinity has significantly increased the number of its outlets and unveiled new products tailored to Korean customers.

Known for its signature Whopper burgers, Burger King operated 411 franchise restaurants in Korea at the end of March, more than McDonald's 404 outlets in the Asian country.

Its aggressive expansion boosted 2020 sales at the Korean operations by 14% to 571.3 billion won, outpacing McDonald's 7% on-year growth in the country.

However, cutthroat competition among fast-food companies, including Korea's homegrown Mom's Touch, has undermined its profitability.

Burger King Korea's 2020 operating profit more than halved to 8.1 billion won from 18.1 billion won the previous year. The 2019 result marked its highest operating profit since Affinity Equity's 2016 acquisition.

In 2019, the private equity firm retrieved part of its investment in Burger King through dividend income and by doubling its debt financing from 80 billion won.

Affinity Equity is among the most aggressive investment firms in Korea. As the No. 2 shareholder in SSG.COM, the e-commerce brand of Korea's retail giant Shinsegae Group, it acquired the country's largest recruitment portal JobKorea from Korea-based private equity fund H&Q for about 800 billion won earlier this year.

In August, a consortium of Affinity, GS Retail Co., and British investment firm Permira sealed a 800-billion-won deal to buy South Korea’s second-largest food delivery platform Yogiyo from Germany’s Delivery Hero SE.

Write to Si-eun Park and Jun-Ho Cha at seeker@hankyung.com
In-Soo Nam edited this article.