Ekuinas sells Burger King franchises in Malaysia, Singapore

This completes a restructuring of Ekuinas' food and beverage portfolio, with the quick service restaurant (QSR) assets exited so the group can focus on casual dining through brands. The buyer is Newscape Capital, an investment firm led by Chua Tia Guan and Lee Thaim Wah. Wah is best known as founder of 99SpeedMart, a local convenience store chain.

Ekuinas took a 74.1% stake in Cosmo Restaurants - owner of Burger King in Malaysia - in 2011, committing MYR68.2 million. An additional 20.9% was purchased in two years later for MYR35.4 million. A 100% interest in Burger King Singapore was acquired in 2012 for MYR42.1 million.

The divestment has delivered an IRR of -28.1% and a multiple of 0.45x the capital invested across two direct investment funds, Ekuinas said.

The Burger King assets were originally to be sold to Brahim's Holdings - a listed company that has a variety of food and beverage interests covering in-flight catering and other areas - for MYR95 million. Brahim's teamed up with investment firm Quantum Angel on the deal but shareholders voted against it.

According to a regulatory filing submitted by Brahim's last November, there were 50 Burger King restaurants in Malaysia and 42 in Singapore. Rancak Selera, the entity through which Ekuinas held the Burger King assets, posted a loss of MYR2.7 million in 2013.

Burger King Malaysia generated revenues of MYR72.1 million in 2013, up from MYR59.5 million the previous year, while net losses narrowed to MYR43.1 million from MYR50.7 million. Burger King Singapore saw its revenues fall to S$61.7 million ($43.7 million) in 2013 from S$69.2 million in 2012. Net losses also declined from S$21.1 million to S$4.9 million.

Ekuinas decided to offload its QSR assets after concluding that significant additional financial investment plus operational capabilities were required to expand the network and achieve profitability.

Integrated Food Group (IFG), the umbrella group for Ekuinas' food and beverage assets, still owns the San Francisco Coffee brand in Malaysia, Manahattan Fish Market, New York Steak Shack, the Tony Roma's franchise in Malaysia and the Popeyes franchise in Singapore. IFG's casual dining and desert franchise brands generated a net profit of MYR9.8 million in 2013, have a combined revenue or MYR280.1 million and 443 outlets.

With the Burger King sale, Ekuinas has now exited five investments since it was set up six years ago, generating proceeds of MYR1 billion.

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• Topics
• Exits
• Consumer
• Southeast Asia
• Consumer
• Exit
• Southeast Asia
• Malaysia
• Singapore
• Trade sale
• Ekuinas