Morgan Stanley unit mulls EXR takeover

Global investment bank Morgan Stanley’s private equity arm is in talks to take over Korean clothing retailer EXR Korea, sources said yesterday.

Morgan Stanley Private Equity Fund aims to buy a major stake in EXR Korea as part of its move to tap into the resilience of emerging Asian countries, sources familiar with the matter told Yonhap News Agency.

The fund has been showing keen interest in investing in Asia’s retail industries, such as fashion, food and franchises, which continue to generate cash despite uncertainties in the global economy.

In November, Morgan Stanley Private Equity Fund took control of Korean restaurant franchiser Nolboo NBG. At the time, the deal was estimated to be worth 120 billion won ($106 million).

EXR Korea, a private company founded in 2001, operates sports and casual clothing stores in Korea, China, Japan and Indonesia.

According to the sources, EXR Korea’s net profit reached 14.1 billion won in 2010 and 6.3 billion won in 2011.

If the deal takes place, the retailer could be valued at about 120 billion won, based on the calculation of the past two year’s average net profit times 12, which is the average price earnings ratio for Korean apparel businesses traded on the Korea Exchange.