Proventeus exits Philippines franchise of Kenny Rogers Roasters

The GP paid PHP320 million (then $6.7 million) for a 60% stake in 2009, taking out some of the founding shareholders while others stayed on in a minority capacity. When a competitive process was launched to sell the company – which attracted interest from financial and strategic buyers – those minority investors exercised their right of first refusal and acquired the private equity firm’s position. Proventeus has secured a 5.6x return in peso terms.

When the GP was invited into the deal by the US master franchisor, which was concerned about the growth prospects for the business, there were 35 KR Philippines outlets. Proventeus increased the store count to 90, but also altered the mix of locations from purely shopping malls to include major transport hubs and other high traffic areas. Steps were also taken to engage consumers through updating store formats and more aggressive marketing. Average revenue per store grew by 20%.

“In addition to store network expansion, we opened up new revenue channels. The company didn’t offer delivery services, but we recognized from more developed markets that this could be an area of fast growth. We pushed the delivery side and it grew from almost nothing to 10% of revenue in five years,” said Lew Oon Yew, a managing partner at Proventeus. During the holding period, KR Philippines increased revenue and EBITDA by 3.7x and 5x, respectively.

The Proventeus team made the investment when part of the Malaysia branch of Kuwait Finance House, a leading Islamic bank. They managed a portfolio of $200 million and went independent in 2012. Three years ago, the firm completed a secondary restructuring backed by Committed Advisors that saw four assets spun out into a new vehicle. KR Philippines was one of those assets.

Kenny Rogers Roasters was established in the US in 1991 by country musician Kenny Rogers and John Y. Brown, Jr, a former KFC CEO turned politician. It grew to more than 350 outlets globally before filing for bankruptcy in 1998. Malaysia’s Berjaya Group, the Asian franchisor, took ownership of the brand in 2008. As of April 2018, there were 179 outlets – mostly operated on a franchise basis – in Malaysia, the Philippines, Singapore, Indonesia, the United Arab Emirates, India, and Thailand.

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• Topics
• Southeast Asia
• Buyback
• Consumer
• Philippines
• Proventeus Capital
• Exit