Private equity funds eye Korean F&B expansion

Korean franchises reemerge as investment hotspots amid steady market growth, rising global potential
Private equity firms are increasingly acquiring South Korea's food and beverage companies, capitalizing on the sector's growth despite inflation and economic slowdown.
LBM, operator of the popular bakery brand London Bagel Museum, is reportedly in the final stages of merger talks. The company has been exploring the sale of its controlling stake to several domestic and international private equity firms since last year, with a deal expected soon. Seoul-based PE firm JKL Partners emerged as a potential acquirer, although LBM has denied the report, stating that it is "focusing on securing new investments for overseas expansion," rather than pursuing a sale. LBM is preparing to enter Japan and Singapore, seeking a 300 billion won ($206.4 million) market valuation.
Since the second half of last year, private equity firms have emerged as key players in driving M&As within Korea's food and beverage sector. In July 2024, Elevation Equity Partners Korea and Philippine food giant Jollibee jointly acquired Compose Coffee for 470 billion won. By investing in a joint venture between J&Partners and Quinvir Investment, Samhwa Foods took control of the viral yogurt brand Yoajung. Forest Partners is also in talks to acquire Myeong Ryun Jinsa Galbi for 160 billion won.
Private equity firms are returning to Korea's food and beverage M&A market after a lull starting in 2021, spurred by global inflation and the COVID-19 pandemic. The sector has recently regained its appeal through steady growth. While the broader dining industry faces challenges from a slowing economy, leading franchises continue to perform well. Valuations have been bolstered by shifts during the pandemic era, including the rise of delivery-driven businesses and the growth of social media marketing.
The growing global demand for Korean food, driven by the Korean cultural wave, has also fueled investor interest. Data shows that exports of Korean food reached $11.7 billion last year, up 6 percent on-year, with shipments to the US surging 20 percent.
"The Korean food and beverage sector was once dubbed 'the grave of PEs' due to its limitations — a small domestic market and limited success abroad — despite its traditional appeal," said an official in the local PE industry. "However, recent global successes of Korean companies like Samyang Foods, coupled with the growing popularity of Korean cuisine, have fueled optimism that Korean food and beverage brands can expand internationally."
More PE firms are specifically targeting international opportunities. Q Capital Partners and Koston Asia recently launched the sale process for the chicken franchise Norang Tongdak, while Compose Coffee's new owners plan to position the brand as an affordable coffee franchise spanning Southeast Asia.
While concerns persist over the common PE strategy of scaling a company's value in the short term before reselling it for profit, many experts believe the advantages outweigh the drawbacks, especially as a PE acquisitions can inject vitality into the market.
"While the benefits vary, PE ownership typically allows efficient resource allocation to drive value improvements, leveraging global networks and expertise from previous investments to facilitate expansion to the next level," the official said, noting that many firms are increasingly focusing on operations to drive positive corporate restructuring, rather than merely seeking profit.
A prime example is Han & Co.'s acquisition of Namyang Dairy Products. The company ended a six-year loss streak and returned to profitability in 2024, within a year of the PE firm's leadership. It also made significant strides in restoring brand value, which had been tarnished by ownership issues, including former chairman and founder Hong Won-sik's abuse of power and embezzlement.
Since KL&Partners acquired Mom's Touch in 2019, the brand has grown significantly. After delisting in 2022, KL&Partners focused on strategic value-enhancing, increasing revenue by 26 percent and tripling operating profit in just four years. The company has also expanded aggressively, entering Thailand in 2022, Mongolia in 2023, and Laos and Japan in 2024, with plans for Kazakhstan and Indonesia this year.
A more favorable environment for franchise M&As is expected to revitalize stalled sales for several brands, including Affinity Equity Partners-owned Burger King Korea, which has been seeking a deal for years. Mom's Touch, which failed to secure a 1 trillion won valuation in a 2022 sale attempt, has reportedly reentered the market.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Korea Herald

a day ago

• Korea Herald

Kazakhstan eyes more connection with Korean capital markets: AIFC governor

Kazakhstan is looking for South Korea's capital markets to position the country as a gateway to Central Asia for Korean investors, said Renat Bekturov, governor of the Astana International Financial Center, in an interview with The Korea Herald. The Korean market is one of the most advanced and liquid globally. And with blue-chip companies such as Samsung, the Korea Exchange ranks among the top five worldwide for initial public offering activity, Bekturov noted. He hopes to build institutional links between the capital markets of Kazakhstan and Korea. "We are especially interested in connecting our capital markets, offering Korean investors streamlined access to our financial ecosystem," Bekturov said. According to Bekturov, Korean firms have yet to join AIFC's broker community, but interest from Asian financial institutions — particularly from Hong Kong — is growing, with several firms already joining AIX as trading members. He was in Seoul in April to promote the Kazakh capital market among Korean investors. Beyond finance, Bekturov highlighted Korea's growing industrial presence in Kazakhstan, pointing to Doosan's 300 megawatt gas power plant and upcoming plans to develop a 1,000 MW facility. Hyundai Engineering is participating in multiple regional energy projects, and the AIFC is expanding its outreach through AIFC Connect, aiming to strengthen ties between Asia, Central Asia and the Gulf, with events in Seoul and Hong Kong, according to Bekturov. 'We're here to open doors,' he underlined. 'Korea and South Asia have large, self-sufficient markets, but they're now looking outward for new opportunities and higher returns. Central Asia — and Kazakhstan in particular — offers that.' Citing examples of strong local performance, Bekturov mentioned the IPO of uranium producer Kazatomprom. 'Launched at $11, it peaked at $47 and now trades around $30-35. Including dividends, it's delivered roughly 20-30 percent annual returns,' he said. He also referenced KazMunayGas, a state-owned oil company, whose 2022 IPO has returned close to 40 percent annually. Nearly 4,000 companies are registered in the AIFC, including around 18 Korean firms. 'Many large Korean players like Samsung and Hyundai had already entered the Kazakhstani market before AIFC's launch, but we see growing interest from smaller companies and financial institutions,' Bekturov said. He also highlighted the AIFC's access to regional markets via the Tabadul initiative — a network of exchanges led by Abu Dhabi Exchange. 'Our brokers now offer access to Abu Dhabi, Bahrain and Moscow markets. Through Tabadul, firms in Astana can trade seamlessly across these exchanges,' he explained. The initiative includes the Astana International Exchange and Armenia's Stock Exchange, among others. 'This means that Korean investors connected to AIFC can now access ADX markets, all without leaving their desks,' Bekturov concluded.

Korea Herald

2 days ago

• Korea Herald

Kospi closes above 3,020 for first time in 3 1/2 years

Postelection optimism fuels sharp rally, lifting hopes of a market renaissance The Kospi did not just return — it roared back. On Friday, South Korea's benchmark index surged past the long-awaited 3,000 mark and kept climbing, closing at 3,021.84, up 1.48 percent from the previous session. It was the first time the Kospi ended above 3,020 since Dec. 28, 2021. The rally seemed modest at the start, with the index opening just 0.29 percent higher at 2,986.52. Retail investors led early gains with net buying, while foreigners and institutions sold into strength, keeping the benchmark tightly anchored below the key level. That restraint vanished once the Kospi cracked 3,000 around 10:45 a.m. Momentum took over, lifting the index past 3,010 by 11:20 a.m. The market stayed buoyant throughout the afternoon, hovering near 3,010, before accelerating again in the final minutes of trading. The Kospi hit an intraday peak of 3,022.06 just before the close, settling near the high of the day. It was a historic session: Not only did the Kospi reclaim the 3,000 level for the first time since January 2022, but total market capitalization hit a record 2,472 trillion won. According to the Korea Exchange, the Kospi first crossed the 3,000 mark on Jan. 7, 2021, peaking at 3,305 in July that year. But post-COVID-19 momentum faded amid a global slowdown and recession fears, pushing the index into a prolonged slump. For much of the past year, it remained trapped in a narrow range between 2,200 and 2,800. Gains were broad-based, with most of the Kospi's top market heavyweights finishing higher. SK hynix and LG Energy Solution each rose more than 4 percent, while Naver surged nearly 7 percent. Hyundai Motor climbed 1.5 percent and Samsung Biologics added 1.7 percent. The tech-heavy Kosdaq also posted solid gains, rising 1.15 percent to close at 791.5. Institutional and foreign investors bought a combined 84 billion won, offsetting retail selling. Friday's milestone extends a two-week honeymoon rally under President Lee Jae-myung's new administration, reinforcing renewed investor confidence despite external headwinds, including Middle East tensions and lingering tariff risks. The Kospi has staged a near-unbroken rally since June 2, the eve of the general election, logging only one down day on June 13. After crossing the 2,700 mark on Lee's first full day in office, the index has jumped 12 percent, buoyed by expectations for policy reform and pro-growth momentum. 'The Kospi reversed course earlier this year as dip-buying resumed and the Trump administration announced tariff deferrals, with the rally gaining further traction around the presidential election,' the Korea Exchange said. 'The launch of the new administration has eased political uncertainty and lifted sentiment on expectations of market-friendly policies.' Analysts say the market is responding sharply to government signals. 'The Kospi's strength is being driven more by expectations of capital market reform and a valuation rerating than by earnings growth,' said Kang Jin-hyeok, analyst at Shinhan Securities. He added that Friday's rally reflected investor optimism following Thursday's unveiling of a 30.5 trillion won ($22.3 billion) supplementary budget. "This, combined with expectations of one or two additional rate cuts later this year, is fueling hopes for increased liquidity in the market.' Market watchers expect momentum to persist, brushing aside concerns of postelection fatigue. 'If current earnings trends hold, the Kospi could reach 3,100 by year-end,' said Noh Dong-kil, strategist at Shinhan Securities. 'And if rising liquidity drives a further rerating in valuations, the index could climb as high as the 3,400 range.' 'Despite the rally, Kospi's valuation remains at a neutral level," said Lee Soo-jung of Meritz Securities, adding, "With stimulus measures such as the supplementary budget and revisions to the Commercial Act upcoming, there's a strong possibility of an overshoot in the Korean stock market.' Lee anticipated foreigners to remain key drivers. After nearly 10 months of net selling, foreign investors turned net buyers in May, purchasing 1.2 trillion won, followed by an additional 5.3 trillion won in June. They remain net sellers of 8 trillion won year-to-date. Still, caution lingers as external risks and a slowing domestic economy continue to pressure sentiment. 'Despite strong policy momentum and supportive catalysts unique to the Korean market, broader fundamentals and external risks — such as weak earnings prospects, trade tensions and geopolitical instability — should not be overlooked,' said Han Ji-young, strategist at Kiwoom Securities. 'A breakout above 3,100 this year is possible, but navigating volatility will be crucial at those levels.'

Korea Herald

2 days ago

• Korea Herald

[Bio USA] Celltrion deepens global ties, unveils R&D vision at Bio USA

BOSTON — Korean biotech company Celltrion showcased its expanded vision as a next-generation drug developer at Bio USA this week, using the global stage in Boston to deepen ties with international partners and explore cutting-edge biotech collaborations. According to Celltrion on Thursday, the company held more than 150 meetings over the four-day event, engaging in discussions with global pharmaceutical and biotech firms on a wide range of potential collaborations. Over 1,800 visitors stopped by Celltrion's booth during the convention, as announced by the company. Focusing on its core mission of "new drug development" this year, the company concentrated on exploring partnership opportunities to strengthen its pipeline in areas such as antibody-drug conjugates, multispecific antibodies, novel antibody drugs and peptides. The company also held extensive discussions on open innovation initiatives aimed at identifying promising technologies in drug development. Celltrion plans to closely review the meetings from Bio USA to identify potential partners with high growth potential and technical capabilities. In addition, the company said it engaged in wide-ranging talks about expanding its distribution network, receiving collaboration proposals from various companies for drug transportation, storage and other logistical support. Celltrion supplies its biosimilar products through direct sales channels in major global markets. For countries where it relies on indirect sales, the company actively held meetings to strengthen its existing distribution networks. Beyond business meetings, Celltrion also conducted promotional activities throughout the event, such as placing QR-coded brochures throughout its booth to highlight the company's key businesses and major products. Visitors who participated in surveys were offered custom keychains as part of a fun event to drive engagement. 'There was notable interest this year in Celltrion's expansion into the new drug development space,' a Celltrion official said. 'We are committed to securing the best technologies and potential partnerships to advance our pipeline of novel therapeutics. These efforts will reinforce Celltrion's capabilities as it grows into a major global pharmaceutical company.' Celltrion has participated in Bio USA for 16 consecutive years since 2010, continuously seeking global partnerships.