Private equity firm Creador is picking up a 30% stake in Malaysia’s Loob Holding, which owns the Tealive bubble tea brand.
Malaysia-headquartered Creador is said to have picked up the stake for a consideration of 260 million ringgit ($63.11 million) in the deal that values the bubble tea brand owner at over 800 million ringgit ($194.16 million), people close to the development told DealStreetAsia.
Creador founder and CEO Brahmal Vasudevan and Loob Holding CEO Bryan Loo declined to comment on the deal value.
Local media The Edge Markets first reported on the price tag of the transaction.
The investment is being conducted through Uttama Limited, an affiliate of Creador IV LP, according to a joint statement on Thursday. Nomura acted as the financial adviser on this transaction.
Following the investment, Loob Holding is now looking at an IPO plan only over the next three to four years, the people mentioned above added. As reported by DealStreetAsia in July last year, Loob had postponed its earlier plan for an IPO, which was scheduled for 2020, to at least the middle of 2021 owing to poor market sentiments.
Bloomberg first reported in May 2019 that Loob was considering an IPO to raise as much as 300 million ringgit ($70 million) in 2020 at a valuation of up to 1 billion ringgit.
In the statement, both companies expressed confidence that the strategic partnership would take Loob to the next level, especially given Creador’s track record with aiding the growth of its investee companies.
Vasudevan said the firm chose Loob to be its first investment in the fast-growing food & beverage sector as Tealive had grown to be the regional leader with over 650 stores in less than five years.
“The made-to-order tea market in Malaysia has been growing over 20% in the last few years and the beverage chain per million population remains underpenetrated when compared with peers in the region and developed countries,” he said, adding that the firm sees tremendous opportunity for further growth not only in Malaysia but also in the neighbouring Asean markets.
He said Loob’s revenue of 307 million ringgit ($74.52 million) and net income of 58 million ringgit ($14.07 million) for the financial year 2020 translated to a three-year compounded annual growth rate (CAGR) of 56% in revenue and 180% in net income.
Sharing Tealive’s plans over the next three years, Loo said, “we will continue to focus on our digital strategy and prioritising customer convenience including various cashless and contactless ordering channels – scan to order, order ahead and drive-in model across the store network.”
The company also owns other food and beverage brands including Tealive Eats and coffee chain Bask Bear Coffee.
Tealive currently serves over five million consumers per month in Malaysia and has a presence in Australia, Brunei, Myanmar, the Philippines, United Kingdom, Vietnam, and Cambodia.
The bubble tea market, valued at $2.4 billion in 2019, is forecast to reach $4.3 billion by 2027, registering a CAGR of 7.8% from 2020 to 2027, according to a report by Allied Market Research.
Other prominent bubble tea brands in Asia include Chatime brand-owner La Kaffa International, which has been listed on the Taipei Exchange since 2015. It has a market capitalisation of 4.59 billion New Taiwan dollars ($165.91 million). B&S International Holdings, which runs the TenRen brand and debuted on the Hong Kong stock exchange in 2018, has a market cap of HK$336 million ($43.3 million).