Korea Investment in $4.4 bn lending group for Tropicana deal

Korea Investment & Securities Co. will arrange senior and mezzanine loans for Paris-based PAI Partners to fund its acquisition of Tropicana and other juice brands from PepsiCo Inc., the South Korean brokerage company said on Monday.

The French private equity firm has kicked off the $4.4 billion financing process for the cross-border acquisition announced in August of last year, according to Korea Investment.

Korea Investment is the only domestic financial services firm among the syndicated loan providers, which include Credit Suisse and Bank of America, according to the company.

JPMorgan is advising PAI on the deal.

Established in 1947 by Italian immigrant Anthony Rossi, Tropicana commands the top spot in North America's chilled orange juice market.

But as consumers are moving toward low and zero-sugar beverages, its fruit juice sales have been declining. PepsiCo's juice business earned around $3 billion in 2020 net profit, but its profit margin fell short of other divisions'.  

To join the global financing package, the brokerage company under Korea Investment Holdings Co. said it had made full use of its overseas network and experience built in New York and Hong Kong. In particular, its Hong Kong branch had stayed in touch with the French private equity firm. 

Korea Investment said it will put more efforts into creating synergy effects between its overseas operations and expanding their global network and deal pipeline to improve its track record in various areas in corporate finance.

PepsiCo in August 2021 agreed to sell a majority stake in Tropicana and other select juice brands in North America to PAI Partners, with an option to sell certain juice businesses in Europe.

Back in 1998, the US food and beverage group bought the global Tropicana juice business from Seagram Co. for $3.3 billion.

After the stake sale is completed, PepsiCo will retain a 39% non-controlling interest in a newly formed joint venture with PAI, alongside exclusive US distribution rights to the brands.

It will focus on growing its portfolio of healthier snacks and zero-calorie beverages, according to its statement released last August.

Write to Ye-Jin Jun at ace@hankyung.com
Yeonhee Kim edited this article