Private equity firm Abraaj Group has acquired Southeast Asia’s wine themed food and beverage (F&B) chain Wine Connection for an undisclosed amount, marking its fourth acquisition in the region, the company said.
The Abraaj Group, that operates in growth markets of Asia, Middle East, North Africa, Turkey, Sub-Saharan Africa and Latin America, has invested in over 20 F&B related businesses globally, including Acurio Restaurantes, a leading Peruvian restaurant group, and Yorsan, a leading branded dairy producer and distributor in Turkey.
“Founded in 1998, Wine Connection offers affordable, high quality and exclusive wines from around the world through its F&B outlets. Since inception, it has grown into the largest owner and operator of wine themed F&B concepts in Southeast Asia, with over 55 outlets in Singapore and Thailand. The company targets the region’s growing middle class through a differentiated offering, focusing on affordable and quality western food and beverages,” Abraaj said in a statement.
Explaining the logic behind the move, the PE firm said that the F&B sector was a direct beneficiary of the domestic, consumption-led growth evident across this region. “Rapid population growth, urbanisation and the rise of the middle class across the region are the primary drivers for the sector’s growth. Wine Connection is well positioned to leverage the opportunities that come with these fundamental market dynamics,” the statement added.
Abraaj said it will draw on its expertise in the industry to drive growth by increasing Wine Connection’s footprint in the existing markets and replicating its successful business model across new territories, both in the region and beyond.
Its investment into Wine Connection is through its second Southeast Asia fund, the $250 million vehicle it launched two years ago, when it merged with Aureos Capital. The firm plans to raise its third fund dedicated to this region next year. Its first Southeast Asia fund is 90% realised and has seen about 15 exits leading to a 2.7x cash multiple.
According to information on its website, the PE firm manages US$ 7.5 billion in assets, operating through over 25 offices in Asia, Africa, Latin America and the Middle East. In the financial year 2013-14, the group has done 12 new investments, deploying $750 million and exited 17 investments with $480 million in exit proceeds. The group’s regional headquarters in Singapore with five other offices in the South East Asian region, where it has deployed $ 492 million in 45 investments across eight sectors, till now.
In a media statement, Omar Lodhi, partner and head of Southeast Asia at The Abraaj Group, said: “Our investment in Wine Connection aligns with our proven strategy of investing (in companies) in growth markets that are driven by attractive long-term market dynamics. Wine Connection presents attractive potential for growth and we are delighted to be partnering with Michael Trocherie and his team at this stage of the company’s evolution. Leveraging our regional and F&B experience, combined with Michael’s skills, we are confident that we will be able to drive the company towards even greater success in the future.”
Srisant Chitvaranund, managing director (MD) at The Abraaj Group, added: “Wine Connection’s success since opening in 1998 is a testament to its ability to focus on an offering that taps into the rising middle class in Southeast Asia. The consumption-led growth across the region will provide us with a robust platform to expand Wine Connection into the next phase of its growth, leveraging operational efficiency, increasing the number of stores in current markets and targeting new countries both in the region and around the world. With our excellent track record of developing businesses in Southeast Asia, we are extremely excited about the opportunity to work with Wine Connection’s management team to take it to the next level.”