TRG agrees sale of Korean fried chicken business BHC

NH Investment & Securities is providing debt financing for the deal, while MBK Partners’ credit and special situations unit will cover the mezzanine tranche, according to a source familiar with the situation. There is also some third-party equity funding. Korean media reported that the transaction values BHC at approximately KRW600 billion ($525 million).

BHC is one of five companies that together have a more than 50% share of Korea’s fried chicken quick service restaurant (QSR) market. The segment was worth KRW3.5 trillion ($3.1 billion) in 2016, while the overall QSR industry generated revenues of KRW13.1 trillion. BHC has around 1,400 restaurants in Korea that operate on a franchise basis, and most of the franchisees are single-store operators.

The initial investment in BHC was made by Citi Venture Capital International (CVCI) in 2013, a few months before the bank announced it would divest its private equity business to TRG for regulatory reasons. It paid around $100 million for a majority stake.

At the time, BHC had 730 restaurants, of which 30% were “beer zone” establishments designed to appeal to after-work drinkers and diners. TRG supported management in a reinvigoration of the brand, positioning it as part of the gastropub phenomenon to appeal to younger customers. Half of BHC’s restaurants now fall into the beer zone category, but the menus have been expanded and the store layouts modernized. Mood lighting and craft beers are increasingly part of the offering.

Tighter franchise management was also introduced, which helped BHC stop losing franchisees and start gaining them. As of last year, the company ranked second in the fried chicken QSR market by revenue and store numbers, with a 13% market share in terms of sales. EBITDA has increased more than fivefold.

There are around 2,100 restaurants under the BHC umbrella group, following several bolt-on acquisitions of four separate brands. Two of these deals were financed through a project fund raised by TRG in 2016. BHC opened its first fried chicken restaurant in Hong Kong two months ago and there are plans for further international expansion.

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• Topics
• North Asia
• Consumer
• Buyback
• South Korea
• Exit
• The Rohatyn Group