KKR, Affinity exit Oriental Brewery to AB InBev for $5.8b

According to AVCJ Research, it is the largest-ever trade sale exit in Asia by private equity investors in dollar terms.

KKR and Affinity acquired Oriental Brewery from AB InBev in 2009 for $1.8 billion as part of the multinational beer company's efforts to ease the debt burden creation by InBev's purchase of Anheuser-Busch a year earlier. Each PE firm put in $400 million in equity.

The transaction included an option for AB InBev to buy back the business on predetermined financial terms within five years. This option period is due to expire in July 2014 and the reacquisition is scheduled to close ahead of this date. Also under the terms of the original transaction, AB InBev will receive approximately $320 million in cash.

Once returned to the AB InBev portfolio, Oriental Brewery will retain its current name and will continue to be led by CEO In-soo Chang.

During KKR and Affinity's ownership period, the company has emerged as South Korea's largest brewer, dominating the market alongside smaller rival Hite Jinro. Growth has primarily been driven by the Cass brand, but Oriental Brewery is also known for OB Golden Lager and Cafri. In addition, it is the exclusive distributor of select AB InBev brands in the country such as Budweiser, Corona and Hoegaarden.

Oriental Brewery's 2013 EBITDA is estimated to be approximately KRW529 billion ($500 million).

Between 2009 and 2012, beer sales in South Korea by volume grew at an annual rate of approximately 2%, with premium brands growing by 10%. The market is expected to expand by more than 13% between 2012 and 2022, according to Plato Logic, a specialist beer research firm.

The investment was made by KKR Asian Fund I and Affinity Asia Pacific Fund III. Both firms have closed successor vehicles in the last year. KKR announced a final close of $6 billion on its second Asian fund in June 2013 while last week it emerged that Affinity had raised $3.8 billion for its fourth regional vehicle.

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• Topics
• Exits
• Consumer
• North Asia
• Consumer
• Exit
• Trade sale
• South Korea
• Affinity Equity Partners
• KKR