300 billion bet on the big canadian hand bhc, which gets 400 billion alone

View of the bhc chicken shop. Hankyung DB

The Canadian Commission for Pension Investment (CPPIB), one of the top five pension funds in the world, is committed to the growth of the Korean poultry industry. The investment target is bhc Group, which has a restaurant brand like bhc, a chicken franchise company famous for ‘Pwrinkle’ and ‘Macho King’. In the process of attracting investment this time around, the bhc group’s corporate value was valued at around 1.8 trillion won, almost three times more than two years ago. It is unusual for the Global Pension Fund to invest directly in Korean companies.

Betting on the growth of the Korean poultry industry

According to the investment banking industry (IB) on the 16th, CPPIB signed a contract (SPA) for the sale of capital shares, joining the national private equity fund (PEF) MBK Partners Special Situation Fund (SSF) to participate as a new investor in the bhc group. . CPPIB’s investment scale is approximately 300 billion won. The total transaction volume amounts to 1.8 trillion won. Existing investors MBK and bhc group president Park Hyun-jong (photo) also participated in the transaction.

Consequently, the existing special purpose corporation (SPC) Global Restaurant Group (GRG), which had a 100% stake in the bhc group, will be replaced by a new SPC involving new investors such as CPPIB together with MBK SSF and Chairman Park. Two years have passed since President Park acquired the bhc group with MBK and Elevation PE for 680 billion won in December 2018 and established GRG. MBK, Chairman Park and CPPIB plan to invest 965 billion won in the new fund, with the remaining 850 billion won through acquisition financing.

CPPIB is a Canadian pension fund with total assets under management exceeding KRW 400 billion. The amount of investment in Asia is around 100 trillion won. Although the size of the investment is smaller than that of the National Pension Plan, the rate of return reaches 10% in a cumulative average of 10 years. Sui Kim of McKinsey and Carlisle is in charge of the investment in the Asia Pacific region. CPPIB is also a major fund investor (LP) of MBK Partners.

The business value of the bhc group has almost tripled in two years. The bhc group operates five restaurant franchise brands, focused on bhc, Korea’s second-largest chicken franchise company, including Warehouse 43, a specialty meat restaurant, Grand Mammam Grand Mae Sundae, Gram Gram and a restaurant with fluoride. It was a subsidiary of Genesis BBQ Group, but was sold to the American PEF Lohatin Group in 2013. President Park of Samsung Electronics was hired as the new professional manager of bhc after going through a barbecue. He was recognized for his management skills by elevating bhc, which ranked 10th in the industry, to second in four years. Then President Park took over management rights directly with MBK and Elevation PE in 2018. It attracted attention as the largest MBO (management purchase method) transaction in Korea.

Bhc’s performance is expected to be the highest this year

bhc focused on developing new menus and improving logistics efficiency. Bhc’s Pwrinkle and Machoking are popular with young people in their late teens and early twenties. Diversification of secondary menus, such as cheese balls, is also an important factor in driving sales. The number of franchisees across the country has increased from 1,450 in 2017 to approximately 1,500 last year. It is the second most common after barbecue.

This year is expected to record the highest performance ever. Operating profit nearly doubled compared to 2017, before MBK and President Park took office. In 2017, sales of 330 billion won and operating profit before depreciation (EBITDA) of 85 billion won, showing the exit of the cash flow window, are expected to record sales of 450 billion won. won and EBITDA of 140 billion won this year. Compared to rivals Kyochon and BBQ, sales are similar or small, but EBITDA is known to be overwhelmingly high.

The growth of the food delivery market was also a key background for this investment. The food delivery market grew from 12 trillion won in 2015 to 22 trillion won this year. During the same period, the domestic chicken market has grown from 4 trillion won to 8 trillion won this year, registering an average annual growth rate of 10%.

Reporter Kim Chae-yeon [email protected]