S.Korea's top laundry franchise Cleantopia sold to PEF

South Korea's largest laundry service provider Cleantopia Co. was sold on Tuesday for about 190 billion won ($165 million) to Seoul-based JKL Partners, which expects to enhance the franchise operator's value with the introduction of mobile-based services and computer system upgrades.

Founder and chairman of Cleantopia, Lee Bum-taek, signed an agreement with the private equity firm on Aug. 10 to sell full ownership of the 29-year-old company held by himself and related parties, according to investment banking sources. Samil PwC managed the sale, with EY Korea tasked with the due diligence review of Cleantopia.

Several buyers had shown interest in Cleantopia, but Chairman Lee preferred to enter into exclusive talks with one strong candidate, JKL.

Lee, an ex-employee of Lucky Chemical, currently known as LG Chem Ltd., established the laundry and dry cleaning franchise in 1992. It has rapidly penetrated into the market dominated by mom-and-pop stores by introducing the dress shirt dry cleaning service for just 500 won apiece. In the following years, it expanded its services into bedsheet washing and sneakers cleaning. 
 
Recently, Cleantopia launched the laundry storage service for bulky winter clothes and curtains after dry cleaning, and set up coin laundromats. Thanks to the new services, its 2020 operating profit soared to its largest-ever 9.1 billion won on revenue of 84.5 billion won.

It commands 80% of the country's laundry and dry cleaning market, with 2,945 franchise shops across the country. The company is expected to benefit from the growth of single-person households and dual-income families.

The buyout deal comes after JKL raised 750 billion won through its fifth fund late last year. The new vehicle has drawn 160 billion won from the National Pension Service and 100 billion won from Korea Post. At the time, the Korean PEF said it targeted domestic manufacturers with a view to driving their digital transformation and improving their corporate value.

Cleantopia was one of about 20 privately-held South Korean companies up for sale, whose founding families decided not to hand over the management rights to their children. 

Write to Ji-hye Min at spop@hankyung.com
Yeonhee Kim edited this article.