Navis, Rabo see 1.9x return on Thai duck deal

The PE investor's involvement can be traced all the way back to the Asian financial crisis when Bangkok Ranch was teetering on the brink of insolvency, unable to devise a financial structure that could rescue the business. Navis Asia Fund I acquired a majority stake in the company in 1999.

Bangkok Ranch eventually emerged as a key player in Thailand's duck processing industry, building up a 50% market share. In 2007, Navis and Rabo Capital - Rabobank's mid-market buyout arm - teamed up to buy Bangkok Ranch outright and also acquire Duck To Holdings, a leading European producer of deep-frozen Peking duck based in the Netherlands.

The transaction, which was channeled through Navis' fifth fund, created a combined entity with an enterprise value of THB4.3 billion ($141 million). It was intended to give Bangkok Ranch greater sales reach in Europe, as well as reduce export costs and get exposure to the European raw duck market through Duck To.

"The merger accomplished most of its objectives - Bangkok Ranch became more widely distributed in Europe and at lower cost as middlemen and traders were eliminated," says David Ireland, a Thailand-based partner at Navis.

In 2010, Bangkok Ranch completed the bolt-on acquisition of UK- and China-based Cherry Valley Farms (CVF), a duck genetics business. CVF has two core divisions: a UK-based processing business that produces duck genetic stock, and a livestock division in the UK, Germany and China.

Despite the global financial crisis hitting European demand for Peking Duck - consumers made fewer trips to Chinese restaurants - Bangkok Ranch's EBITDA increased to THB726 million from THB590 million during Navis and Rabo's ownership period.

"We were largely successful and enabled the company to maintain margins despite sharp drops in price in the European market," Ireland says. "Another key initiative was to expand our Thai domestic sales - the Thai consumer market is growing strongly and the Thai people are avid duck eaters. Increasing sales in Thailand was successful and critical to our continued success."

The PE firms' exit to a consortium led by Bangkok Ranch and Duck To's founders values the combined assets at THB5.7 billion ($188 million). Navis and Rabo achieved a 1.8-1.9x return on their investment, including dividends paid during ownership.

CVF is not included in the transaction. Prior to the transaction, Navis and Rabo held approximately 86% of the group; now the pair own 98% of the CVF business.

"CVF was added to the Bangkok Ranch Group in 2010 and is a newer investment for the fund," Ireland says. "In addition, we believe the CVF business - particularly the China-based subsidiary - has substantial room to continue its strong growth and profitability.

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• Topics
• Southeast Asia
• Exits
• Consumer
• Navis Management
• Thailand
• Exit