Standard Chartered PE takes Smoothies Korea overseas

It is the first cross-border acquisition by a Korean company of a global brand in the food and beverage sector. Charles Huh, head of SCPE in Korea, sees such deals as a potential sweet spot for private equity.

"Korea is not a big market - 50 million people - and the economy is growing at 3-4% a year. With organic growth you can get double digit returns but it's difficult to find," he told AVCJ. "But if there is a business that is proven in Korea, it will work elsewhere in the world."

Set up in 2003, Smoothies Korea was Smoothie King's first overseas franchise and has become the most successful, owning and operating 140 stores. The company positioned the brand in Korea as a high-end product delivered in a premium café environment, attracting a younger demographic than in the US. According to Huh, 80% of the customers are in their mid-teens to early 30s.

SCPE reached out to Smoothies Korea last year, offering the capital and expertise required to acquire Smoothie King. The transaction not only gives the Korean firm a network of more than 530 franchised outlets in the US, but also full ownership of the brand itself. Negotiations are already underway to take it into Singapore, and this will be followed by forays into China, Malaysia, Indonesia and India.

SCPE has a significant minority stake in the company.

"Smoothies Korea has built a highly defendable and sustainable position," Huh said. "We are enthusiastic about the company's plans to acquire the global brand, and we look forward to assisting Smoothie King in its efforts to become the Starbucks-equivalent of the fast-growing and health-conscious quick service restaurant segment."

SCPE and NPS created their co-investment partnership in March of last year and it has now delivered four investments. Nearly 90% of the capital NPS committed to the partnership has been deployed.

Apart from Smoothies Korea, two of the investments are in Korean companies - Doosan Industrial Vehicle and Daelim Motor, the country's leading forklift manufacturer and motorcycle manufacturer, respectively - and the other is in a Middle East-based building materials group.

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• Topics
• North Asia
• North America
• Consumer
• Expansion
• South Korea
• Consumer
• Outbound investment
• USA
• Growth capital
• Standard Chartered Private Equity