Korea's Centroid rallies local support for TaylorMade buyout

The private equity firm, which has no blind pool funds to draw upon, secured approximately KRW650 billion from Yuanta Securities, enabling it to proceed with the bid, according to a source close to the situation. Domestic LPs, including Korea Federation of Community Credit Cooperatives (KFCCC) and Hana Financial Investment, will provide an additional KRW350 billion in mezzanine financing.

There will also be KRW900 billion in leveraged financing provided by Shinyoung Securities, the source added.

A second source claimed that Centroid initially sought strategic investors, but none were forthcoming, so it switched focus to financial backers. However, since the deal's announcement, strategic investors have expressed interest in participating in the equity or debt portions. The introduction of additional participants could see the structure change.

Both sources noted that it is likely to be finalized within three months. Centroid, which is said to have been prepping the deal for more than a year, declined to comment.

The seller is US-based mid-market buyout firm KPS Capital Partners, which carved out the business from Adidas in 2017, paying $425 million. TaylorMade reportedly posted EBITDA of $113 million in 2020 and is expected to hit $150 million this year.

Single-asset project funds are common in Korea but prevailing in a US auction process without committed capital is unusual. This – and the aggressive valuation multiple Centroid was offering – was initially seen as risks to deal completion, one advisor said.

However, anchor financing was in place and the firm’s familiarity with the industry and the popularity of the brand gave the seller confidence that enough investors could be brought into the deal. Plus, “Korean people love golf,” the advisor said.

Centroid is likely to seek domestic or foreign acquisitions to add golf fashion and other accessory businesses, the first source said. The private equity firm’s existing portfolio companies include South Springs Country Club, a golf course operator in Korea. Expansion into fashion would maximize synergies across the businesses.

“The industry is currently experiencing high demand, increased participation with strong long-term opportunities around the world. TaylorMade is an iconic brand with continued momentum across the key golf equipment categories and regions, especially the Korean and wider Asian markets,” Jin-hyeok Jeong, CEO of Centroid, said in a statement confirming the investment.

Founded in 1979, TaylorMade produces golf clubs, balls, apparel, and accessories. It ranks first or second by global market share in most of its key categories and markets. The company works with more than 1,500 PGA Tour professionals, among them Rory McIlroy, Dustin Johnson, Collin Morikawa, and Tiger Woods, as well as leading Korean women’s player Sung-hyun Park.

TaylorMade is not the only global golf brand to come under Korean ownership. In 2011, Fila Korea teamed up with a consortium led by Mirae Asset Private Equity to acquire Acushnet Holdings, owner of Titleist and FootJoy for $1.2 billion. The company went public in the US in 2016, facilitating partial exits for several financial investors. Acushnet currently has a market capitalization of $3.8 billion.

Centroid was established in 2015 by Jeong, who formerly worked at Macquarie Securities. It has approximately KRW400 billion in assets following three acquisitions. In addition to South Springs – bought for KRW190 billion earlier this year – Centroid owns chemical materials producer Kolon Advance Fiber and book and publications delivery company Woongjin Booxen.

The TaylorMade auction process was arranged by Morgan Stanley and Allen & Company. Kim & Chang and DLA Piper served as legal counsel while KPMG, Bain & Company, and Caple Advisory acted as advisors to Centroid.

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• Topics
• North America
• Buyouts
• North Asia
• Consumer
• South Korea
• USA
• Centroid Investment Partners