Family-owned and run Leong Hup Holdings Bhd has opened up its equity holding to Affinity Equity Partners in a strategy to institutionalize and put professionals at the helm of the company.
Affinity has reportedly secured its first investment in Malaysia by acquiring a minority stake in poultry supplier Leong Hup International in a deal that valued the company at around US$600 million excluding debt.
A company executive, when contacted, was tight-lipped about the deal. “The management does not want to disclose anything yet, we were given specific instructions,” the executive explained. But did not deny the deal.
The private equity firm was understood to have approached Leong Hup in 2012, right before it was taken private from the Malaysian stock exchange. At that point, the company was valued at MYR427 million (US$130.5 million).
Leong Hup consolidated its operations under a single holding company in which Affinity holds a stake, and market experts say the restricting was undertaken to facilitate the deal.
The exercise was also part of Leong Hup’s long-term succession planning, to gradually relinquish day-to-day management duties to professionals.
Affinity was also expected to support the company’s expansion within Southeast Asia, from growing its presence in Vietnam and Indonesia to consolidating its position in Malaysia.
Leong Hup is a major upstream poultry player in Singapore, Vietnam and Indonesia providing feed, parent stock and day-old chicks to independent farmers.
The company was first listed on the Bursa Malaysia in 1990. It was delisted in April 2012 by the founding family as the stock was illiquid.
It started a processed foods division last year called Malindo Feedmill. This unit is listed on the Jakarta Stock Exchange with net sales of IDR4.2 trillion (US$345 million) in 2013, 25% higher year-on-year. Net income fell 20% to IDR241 billion mainly due to foreign exchange losses.
Affinity Equity Partners is among the largest private equity firms in Asia, focusing on leveraged buyout and growth capital transactions.
Affinity advises and manages over US$7 billion of funds and assets. The firm has completed transactions in nine countries with total value aggregating US$12 billion to-date.
photo courtesy – freedigitalphotos.net