Corstone, Q Capital in talks with foreign investors to sell K-chicken chain

Seoul-based private equity firms Corstone Asia and Q Capital Partners are in talks with foreign investors to sell a South Korean fried chicken chain operator in an estimated 150 billion won ($103.2 million) deal, taking advantage of the global craze for the crispy and savory food.

Corstone and Q Capital have checked interest among foreign investors in a 100% stake in Norang Food Co., the operator of Norang Tongdak, a South Korean fried chicken brand, before sending teaser letters to potential buyers next week, investment banking industry sources said on Tuesday.

The private equity firms put the franchisor on the market in November and appointed Samjong KPMG, the South Korean unit of the global audit and advisory firm KPMG, as the deal’s advisor.

Foreign investors are becoming more interested in South Korean fried chicken franchisors, given the growing frenzy for the food worldwide.

The recent weakness in the South Korean won currency offers offshore investors the opportunity to acquire local companies on the dip. Any rebound in the currency is expected to raise their corporate value in dollar terms, allowing investors to enjoy handsome foreign exchange gains.

TEN TIMES EBITDA

The value of the Norang Tongdak deal was estimated at about 150 billion won, or about 10 times 15 billion won in the company’s earnings before interest, taxes, depreciation and amortization (EBITDA) last year, industry sources said.

Such an EBITDA multiple is usually applied to domestic franchisor acquisitions, the sources said.

Norang Tongdak founded in 2009 has been growing since Corstone and Q Capital acquired it for 70 billion won in 2020.

Its operating profit nearly doubled to 11.5 billion won last year from 6.5 billion won in 2019 with sales up to 97.3 billion won from 50.2 billion won during the period.

The number of its franchisees rose to 721 last year from 429 in 2019.

Write to Ji-Eun Ha at hazzys@hankyung.com
 
Jongwoo Cheon edited this article.