Canadian pension fund Ontario Teachers’ Pension Plan (OTPP) has agreed to invest 300 billion won ($275 million) in South Korean fried chicken restaurant chain BHC Group, valuing the franchise at 1.8 trillion won ($1.6 billion), according to a report.
Quoting investment banking sources, The Korea Economic Daily reported on Dec 16 that OTPP recently signed an agreement to buy shares in a special purpose company (SPC) that owns BHC, from its existing shareholders including Asia-based private equity firm Elevation PE.
The SPC was formed in 2018 by BHC Chairman Park Hyun-jong, MBK Partners’ inaugural Special Situations Fund (SSF), and Elevation PE to acquire the chicken franchise for 680 billion won ($617 million).
In 2013, Elevation PE (formerly Rohatyn Group) alone had acquired BHC from another Korean chicken company for about $100 million, according to the report. North Asia-focused private equity firm MBK Partners’ special situation fund reportedly covered the mezzanine tranche of the SPC.
Elevation PE is fully exiting from the Korean franchise, according to the daily.
OTPP valued the unlisted BHC at 1.8 trillion won, almost three times what the SPC paid two years ago.
Under the agreement, OTPP, MBK Partners and BHC Chairman Park are committing a combined 965 billion won as co-investors to a new SPC that will own the fried chicken brand, while raising an additional 850 billion won in debt financing.
Existing investors — MBK SSF and Chairman Park — will not inject additional capital into BHC, the daily reported.
It was reported that NH Investment & Securities, Korea Investment & Securities and Samsung Securities participated in the debt financing.
BHC now runs five franchised restaurant brands, including beef restaurant chains with 1,500 restaurants across South Korea, according to the report.
OTPP has yet to respond to DealStreetAsia’s query at press time.
The OTPP is the administrator of Canada’s largest single-profession pension plan, with C$204.7 billion ($159.37 billion) in net assets as of June 30, 2020. It holds a diverse global portfolio of assets, approximately 80 per cent of which is managed in-house, and has earned an annual total-fund net return of 9.5 per cent since the plan’s founding in 1990.
Ontario Teachers’ is an independent organisation headquartered in Toronto. Its Asia-Pacific regional offices are in Hong Kong and Singapore, and its Europe, Middle East and Africa region office is in London. The defined-benefit plan, which is fully funded as of January 1, 2020, invests and administers the pensions of the province of Ontario’s 329,000 active and retired teachers.