Deal focus: Gong Cha’s global push pays off for Unison

In the space of five years, Gong Cha Korea has risen from local franchise holder for its Taiwan parent company to owner of the global brand. It is no coincidence that this ascent coincided with Unison Capital’s acquisition: the GP saw a potential expansion story at their first encounter.

“We felt from the beginning that owning just a country franchise wouldn’t fully demonstrate the value of the brand, so we feel very proud of the fact that we’ve grown the business in Korea, we’ve entered a new market in Japan, and Gong Cha has expanded into a significant number of countries during our ownership,” says T.J. Kono, a partner at Unison, which recently exited Gong Cha to TA Associates in a transaction reportedly worth around KRW350 billion ($289 million).

Unison acquired a 70% stake in Gong Cha Korea for KRW34 billion ($31 million) in 2014 from its founders, who had launched the Taiwanese bubble tea brand in 2012 and quickly expanded it to 255 stores, mainly in the Seoul metropolitan area. The owners wanted a partner with experience growing consumer brands, while Unison was looking to enter Korea’s attractive food and beverage space.

After its acquisition, the GP moved quickly to overhaul Gong Cha Korea’s internal business structure, replacing the small group of executives with a more specialized management team that could drive global expansion. This phase got underway in 2015 with the purchase of the master franchise rights in Japan; the acquisition of the Taiwan-based parent company followed in 2016.

Since taking over the global brand, Unison has focused on taking Gong Cha into new markets; the company is present in 17 countries now, up from 10 at the time of acquisition. Unison expects expansion to continue to be the order of the day under the new owner, building on the foundation put in place during its holding period.

“This business has quite a bit of growth left in new markets as well as in existing markets like Japan and Korea, so I’m sure TA will have a lot of opportunities to continue the growth trajectory,” Kono says. 

The opportunity to lead a country franchise to take over its parent does not come along every day, and Unison sees the global aspects of the Gong Cha transaction as an exception to its standard investment strategy. But the firm does plan to use the experience to showcase its ability to take portfolio companies to new heights in deals where there is a regional cross-border angle.

“It’s a good representation of our value-add, particularly our ability to introduce or expand a consumer brand in Japan,” says Kono. “Regional expansion into Japan, or into Korea for Japanese businesses, will not be central to our thesis in every investment, but the fact that we have demonstrated that capability in a very specific and visible way certainly helps us.”   

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• Topics
• North Asia
• Consumer
• Expansion
• South Korea
• TA Associates
• Unison Capital