Affinity Equity flipping Burger King in Korea and Japan

Industry

Published: 19 Jan. 2022, 17:48 Updated: 19 Jan. 2022, 19:51

Affinity Equity flipping Burger King in Korea and Japan

A Burger King store in Seoul [YONHAP]

Burger King Korea and Burger King Japan are for sale, according to a report in Nikkei Asia.

The two businesses, which are separate, are owned by Affinity Equity Partners, a Hong Kong-based investment firm with heavy exposure to Korea. It has participated in funding rounds for Lock & Lock, Yogiyo, SSG.com and Kyobo Life Insurance.

It is the sole owner of both Burger King companies and is selling both, Nikkei said citing investment bank sources. The total sale price could be as high as 1 trillion won ($839 billion).

Goldman Sachs has been appointed as advisor to the seller and will be contacting potential buyers. Analysts say that large Korean retailers are possible targets for the investment bank.

Affinity Equity Partners has not commented on the sale.

Burger King Korea's 2021 revenue was 680 billion won ($570 million), up 19 percent. Earnings before interest, taxes, depreciation and amortization (Ebitda) was 80 billion won, up 35.6 percent.

Food franchises normally sell for 10 to 15 times Ebitda. Mom's Touch was acquired for 10 times Ebitda and A Twosome Place for 13 times its Ebitda.

Burger King Korea has 440 branches, overtaking McDonald's in 2020. Korea has more Burger King locations than any other Asian country.

Some 95 percent of all Burger King branches in Korea are reporting profits. In Japan, Burger King had 146 branches as of the end of 2021.

In Japan, revenue was around 15 billion yen ($131 million) last year, up 43 percent on year. Ebitda shifted from negative to a positive 700 million yen.

Affinity Equity Partners purchased Burger King Korea from VIG Partners in 2016 for 210 billion won. In 2017, it signed a master franchise deal with Canada's Restaurant Brands International to run the chain in Japan and paid Lotte GRS 10 billion won for its stake in Burger King Japan.

BY LEE TAE-HEE [lee.taehee2@joongang.co.kr]