Deal focus: GFS brings Navis meaty returns

As Brazilian chilled food producer BRF welcomes its new acquisition Golden Foods Siam (GFS), it may send a thank-you note to Navis Capital Partners.

The Thailand-based cooked chicken producer has been part of Navis' portfolio since 2009, when it was bought from Netherlands-based VION Foods Group. VION had acquired GFS' UK-based parent, Grampian Country Foods Group, the year before. The shifts in ownership had been difficult for GFS' management to handle, and the owners in turn had a hard time prioritizing the needs of a chicken factory half a world away.

"That was something that was very interesting to us, as a theme that we had pursued over the years, where we see a good business that's not necessarily in the core of a big multinational or a big player elsewhere," David Ireland, a partner at Navis, told AVCJ earlier this year.

The GP felt that GFS' management team was capable of growing the business faster than their owners were letting them. Not only did the company have a product that was in demand around the world, the value that it added through the cooking process meant it would be insulated from sudden changes in demand for raw chicken.

"Pure chicken is just a commodity play, there are lots of ups and downs, which is difficult for a company that wants to hold for five or six years, because you may get a bad cycle," Ireland said. "That emphasis on value-add to a certain extent de-risks the pure commodity risk of chicken."

Upon buying the company Navis set about making long-overdue investments. Just months after the acquisition the GP approved a new cooking factory to serve the Asian market. The new plant doubled GFS' production and allowed it to significantly expand its global reach.

Expansion proved to be one of the themes of Navis' ownership. The firm has been keen to grow the company's geographical customer base, building the sales team in order to make inroads into the Middle East, Korea, Europe and Southeast Asia. GFS is now present in 15 markets globally.

With Navis' investments, GFS' output has increased from 26,000 metric tons in 2010 to 43,000 metric tons in 2014. This makes it the third-biggest cooked chicken producer in Thailand. BRF, which sees the chicken producer as an asset to build its global presence, will take on board all of GFS' shares and its assets in Thailand and Europe. For Navis, it means a $360 million pay day and a 3.4x return.

One of the PE firm's most recent investments in GFS was a new feed mill for its farming operation to improve the company's vertical integration. Though Navis had begun to look for an exit, it did not hesitate to make the commitment.

"We had great confidence in the management team," Ireland said. "They recommended it, we did the financial analysis, and because of the success of our previous investment, we had the confidence to make it."

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• Topics
• Exits
• Southeast Asia
• Consumer
• Navis Management
• Southeast Asia
• Thailand
• Exit
• Consumer
• Trade sale