The deal will see Village Grocer Holdings (VGH) purchase the entire issued share capital of BIG from conglomerate The Big Group, which is divesting its retail grocery branch. Financial terms of the transaction were, however, not disclosed.
The sale of BIG by the Big Group represents a divestment that will see it focus on and grow its food and beverage (F&B) business. It currently manages a brand portfolio that includes Plan B and Ben’s restaurant chain.
Incepted in 2004, Village Grocer launched its first outlet in the Bangsar Village mall. Navis Capital acquired a majority stake in the family-owned enterprise from VGH group executive chairman Ong Kim Too and his family in September 2014. This was followed by the acquisition of a substantial stake in the BIG Group in the end of 2015.
PE firms in Southeast Asia have been expressing interest in consumer-related businesses, given the prevailing economic growth narrative of the region that has seen its middle class expand.
This transaction consolidates Navis Capital’s interests, as well as enlarges its stake in the BIG supermarket chain and grants it a deeper footprint in the premium grocery space.
Navis, founded in 1998, has interests in an array of verticals, ranging from food processing, fast-food, casual dining, to industrial products, fast-moving consumer good (FMCG), outdoor advertising, auto rental, consultancy and professional service businesses. It currently manages several private and public equity funds with total assets of $5 billion. At end-June 2016, the Navis Asia Fund posted a gross internal rate of return of 22 per cent and money multiples of 2.5 times.
According to VGH, the acquisition further strengthens its market position as one of the leaders in the premium grocery segment. It also expands its retail grocery footprint, with 13 outlets posting a combined annual revenue of approximately RM560 million ($126.9 million).
BIG has three outlets in Kuala Lumpur, the commercial centre of Malaysia. These are located at Publika Shopping Gallery, Plaza Batai and Glo Damansara, respectively. VGH explains that the BIG brand will be retained, with its present executive management team continuing to run it.
“The acquisition will see Village Grocer — which operates the Village Grocer premium supermarket chain — strengthening its position in the premium grocery shopping segment as it will result in it having a total of 12 outlets and a combined revenue of over half a billion ringgit. It will also bring about operational synergies. The deal is done at a valuation of about 12 times price-earnings ratio,” a source said in a statement to The Edge Financial Daily.
Ong noted that the acquisition of BIG was a “strategic business decision” aligned with plans for long-term growth and expansion. He said, “With this acquisition, we have an opportunity to extract procurement and operational synergies to better serve a growing market segment.”