Headland to take Malaysian Mamee overseas

"When we saw Mamee secure a deal with Manchester United it told us this is a company that clearly has ambitions of going somewhere," says Paul Kang, a senior partner at Headland. "The deal allows Mamee to leverage Manchester United-related marketing, which has already been very successful in Malaysia, in Indonesia and Thailand."

Established by the Pang family in 1971, Mamee has a more than 30% share of the domestic snack and beverage market. Its flagship products - including Mamee Monster, a brand of ramen noodles intended to be eaten raw - are well known to consumers, and Kang is no exception. Born and raised in Malaysia, he too has fond memories of Mamee from his youth.

"That is what we really liked about the deal, my colleagues and I are very familiar with brand and we saw many expansion opportunities for company," says Kang.

He didn't disclose the financial details but said the investment in Mamee, estimated to be worth between $50 million and $100 million, represents a "sweet-spot" deal for Headland. It was channeled through the PE firm's sixth fund, which closed at $1.4 billion in late 2008 and is now two-thirds deployed.

The investment comes less than two years after the Pang family took Mamee private, feeling that the company was undervalued. Headland's priority in helping maximize value is to replicate Mamee's domestic success overseas. There are plans to moving manufacturing to Indonesia and seek marketing synergies with neighboring countries. Expansion through M&A is also possible in Southeast Asia and the PE firm is keen to deploy more capital to support these efforts.

Even without moving into new markets, Mamee is expected to grow at 10-15% per annum through a combination of product extensions and improved distribution and marketing strategies in Malaysia.

Southeast Asia consumer plays are popular among private equity investors, particularly as valuations still compare favorably with the like of China and India. However, Kang warns that increasing competition means GPs cannot always expect a cheap price.

"The segment this company services in Southeast Asia is worth around $7.5 billion and growing at 10-12 % a year, but you are not going to buy in at 5-6x EBITDA. For a business of Mamee's size and scale in Indonesia the multiple will be significantly higher. If you buy into the growth story you have to make sure to pick the right people to execute on the strategy."

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• Topics
• Expansion
• Consumer
• Southeast Asia
• Southeast Asia
• Growth capital
• Consumer
• Malaysia
• Headland Capital Partners