Malaysia's Ekuinas invests $16.9m in domestic sports retailer

As part of the deal, Ekuinas will also purchase a 100% stake in the company's homegrown sportswear brand, AL Sports. The brand will receive additional capital in order to capitalize on growing local interest in health and fitness, according to a statement.

Established in 1993, Al-Ikhsan currently has a 36% market share in the multi-brand sports retail industry encompassing equipment, apparel and footwear. It has 119 outlets in the Malaysian peninsula and stocks 30 different brands. There are already plans for four new megastores in Kuala Lumpur and Perlis, as well as premium specialty stores in Kuala Lumpur and Penang.

Ekuinas has said it will support M&A as well as organic growth in order to accelerate local and regional expansion. Al-Ikhsan has prioritized Indonesia and Thailand within the ASEAN region, and wants to have a presence in both countries within 3-5 years.

Al-Ikhsan's revenue peaked at MYR278 million in 2012 but has since moderated, reaching MYR257 million in 2015, while EBITDA came to MYR23.2 million. Branded sportswear retail sales are expected to see annual growth of 8% through 2020, reaching MYR2 billion, the statement added. Sales in Singapore, Indonesia and Thailand are projected to surpass MYR13 billion over the same period.

"The retail segment is one of Ekuinas' six identified target sectors and our entry into the sports retail segment gives us a wider reach within retail. This acquisition extends the retail portfolio beyond our existing investments in food and beverage," said Raja Arshad Raja Uda, chairman of Ekuinas.

Last year the PE firm completed a restructuring of its food and beverage portfolio, with the sale of the Burger King franchises in Malaysia and Singapore marking its exit from the quick service restaurant (QSR) space. It wants to focus on casual dining, and still owns the Manahattan Fish Market, New York Steak Shack, the Tony Roma's franchise in Malaysia, and the Popeyes franchise in Singapore and Malaysia, as well as local desserts and beverage chain Coolblog.

Ekuinas completed two deals earlier this year in the education and healthcare sectors, consolidating its control of the Asia Pacific Institute of Information Technology and acquiring controlling stakes in MediExpress Group and PMCare. Its direct portfolio also includes assets covering oil and gas services, fast moving consumer goods, and food manufacturing.

As of year-end 2015, Ekuinas had MYR4.1 billion in funds under management. It has deployed MYR2.8 billion across 45 investments since its inception in 2009, including MYR2.47 billion in 26 direct deals across three tranches, and MYR302 million in 19 direct deals across two tranches. Tranche I of the direct portfolio generated a gross IRR for the year of 14.8%, with Tranche II on 13%. Tranche I of the outsourced portfolio posted a gross return of 6.3%.

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• Topics
• Southeast Asia
• Consumer
• Expansion
• Ekuinas
• Growth capital
• Malaysia