Longreach to buy Japanese coffee shop business

The transaction is a carve-out from UCC Foodservice Systems (UFS), which owns several coffee-related food services businesses. The size of the transaction was not disclosed.

Established in 1970, Kohikan is the second-largest full-service coffee shop business in Japan, with 277 stores nationwide. It operates under the Kohikan, Café di Espresso Kohikan, Karakuan, and Kakura brands. Longreach plans to accelerate the company’s growth through rolling out new stores and improving the format of its existing locations. It is also considering cross-border expansion within Asia.

UFS, which has a portfolio of more than 650 coffee shops, has already taken some of its other brands into new markets. Branches of UCC Coffee House, Mellow Brown Coffee, and Ueshima Coffee House can be found in Hong Kong, Taiwan, and Thailand.

The parent company of UFS, UCC Holdings, operates in Japan and several global markets, selling coffee, coffee machines, and related beverage products, as well as running food services businesses. UCC Holdings generated JPY246 billion ($2.3 billion) in sales in 2016 across all its businesses.

Longreach reached a first close on its third mid-market buyout fund in February 2017, with approximately $200 million in commitments. A third close came earlier this year on more than $400 million. The full target is $650 million. The GP operates across North Asia, with a particular focus on Japan, pursuing deals in the $50 million to $250 million range. Fund II closed at $400 million in 2011.

Longreach has a history of carving out assets from Japanese conglomerates and has previous experience in the food services space. In 2016, it bought First Kitchen, a local restaurant operator controlled by Suntory Holdings, and is using it as a vehicle to develop the Wendy’s franchise in Japan.

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• Topics
• North Asia
• Consumer
• Buyouts
• The Longreach Group Limited
• Japan