Affinity to trade Burger King business in Japan & South Korea for $1Bn

Affinity Equity Partners, one of the largest dedicated Asian private equity firms, is reportedly planning to sell off its Burger King fast-food businesses in Japan and South Korea, in a deal that can offer more than $1 billion, said a credible source with knowledge of the matter.

The Hong Kong-based firm has recruited Goldman Sachs to undertake the sale, which targets private equity investors and strategic buyers.

Although, the bank refused to reveal any details on the same.

In 2016, Affinity secured complete control of Burger King South Korea for around $170 million and acquired the American fast-food brand's Japan franchise a year later.

The South Korean business recorded a revenue of $572 million in 2021, with accustomed earnings before interest, depreciation, taxes, and amortization (EBITDA) at $67 million.

It has been reported +that the firm’s adjusted EBITDA in 2022 would reach $83 million.

Moreover, Japan's Burger King adjusted EBITDA was $6 million in 2021.

As per the data published by Refinitiv Eikon, Global fast-food chains like McDonald's and Yum! Brands are currently trading at 20 to 30 times their EBITDA. The Indian branch of Burger King is trading at around 25 times its EBITDA.

Due to the pandemic, the businesses have started to rely more on deliveries in South Korea which has further propelled exponential growth for its food delivery apps.

Recently, Burger King Korea said that the number of monthly active users on its app surpassed 1.4 million in December, the highest since its launch in May 2016.

Amid Affinity's acquisition, Burger King is set to expand in South Korea and Japan. The food-chain runs around 440 outlets in South Korea, more than its competitor McDonald's.

Furthermore, the Japan franchise mentioned that it is working on opening three new outlets in January, which will bring the total number of outlets to 149.

Source Credit - https://money.usnews.com/investing/news/articles/2022-01-18/hong-kong-fund-to-sell-japan-south-korea-burger-king-business-in-deal-over-1bln-source