Indonesia-focused private equity firm Falcon House Partners is said to be in talks with various parties to sell its interest in the food and beverage portfolios managed under PT Eatwell Culinary, three people familiar with the development told DealStreetAsia.
Falcon House is said to be in the market with its stake sale plan since early 2019, and discussions with various parties are still ongoing. The PE firm is understood to own nearly 80 per cent in Eatwell Culinary.
Eatwell Culinary houses Chinese restaurant chain Ta Wan, Japanese cuisine-based Ichiban Sushi, food court operator Eat & Eat as well as the Indonesian Dapur Solo.
Falcon was earlier looking to sell the Ta Wan asset but it now appears that the firm is inclined to divest the consolidated portfolio under the Eatwell roof as part of the stake sale exercise.
The PE firm first picked up stakes in Ta Wan followed by Ichiban Sushi in 2013, among its early investments in the country through Fund I. The firm then acquired the other assets, Eat & Eat and Dapur Solo, and subsequently consolidated all brands under the Eatwell Culinary umbrella in 2018.
According to its website, Eatwell Culinary Group owned and operated more than 210 outlets in 38 cities in Indonesia as of end-2018.
In 2018, Eatwell Culinary Group issued Rp 125 billion rupiah ($9 million) Medium Term Notes programme, which will mature in April 2021. According to the data of the Indonesia Central SecuritiesDepository, Eatwell Culinary’s note carried a fixed annual interest of 10.5 per cent.
Aside from Eatwell Culinary, Falcon House is also said to own interest in lifestyle and hospitality brand Potato Head Family as well as the pastry shop chain The Harvest. It is quite possible that Falcon House may consolidate Potato Head and The Harvest under Eatwell Culinary to create a bigger valuation when it exits the portfolios, said one of the people mentioned above.
Earlier in August 2019, DealStreetAsia reported that Falcon House was in talks to sell its stake in Potato Head, in which it is said to own 35 per cent.
A Falcon House spokesperson told DealStreetAsia, “we have no plans to merge any of our portfolio companies, and any rumor or speculation that we do have such plans is exactly that, baseless rumor or speculation”.
Falcon House Partners Indonesia Fund I was launched by the end of 2011, according to media reports. The fund was closed in 2012 and raised around $200 million. Falcon House’s first fund, which has a 10-year term, was mandated to invest in mid-sized, fast-growing companies with a focus on consumer-related and other domestic demand businesses.
Falcon House’s Fund I LPs include the Swiss Investment Fund for Emerging Market and the US International Development Finance Corporation, formerly Overseas Private Investment Corporation.
As previously reported by us, Falcon House Partners is said to be exploring exit plans for other portfolio firms including food ingredients manufacturer Haldin Pacific Semesta and Brawijaya hospital.
Falcon House specializes in growth capital and middle-market investments, cutting checks between $15 million and $25 million for majority stakes in consumer startups. It closed its Indonesia-focused fund at $400 million in 2016, over 30 per cent higher than its original target of $300 million.
The food retail space in Indonesia has been generating a lot of investor interest riding on the largely untapped market beyond Jakarta and a growing middle-class segment. Active investors in the food and other consumer-driven sectors in Indonesia include Capsquare Asia Partners, Saratoga, Creador and Northstar Group.