Carlyle buys coffee franchise A Twosome Place for over $800 mn

The Carlyle Group has bought South Korea's No. 2 coffeehouse chain A Twosome Place from Anchor Equity Partners, saying it would "capture the significant white space in the Korean market” with the acquisition.

Carlyle Asia Partners V, the US private equity firm's $6.6 billion buyout fund, reached a definitive agreement to take over a 100% stake in the premium dessert cafe chain, Carlyle announced on Nov. 19. The deal was worth about 1 trillion won ($842 million), according to investment banking sources. 

Locally, Twosome Place ranks just behind Starbucks Korea, 70:30 owned by the supermarket chain E-Mart Inc and Singapore's sovereign wealth fund GIC Private Ltd.

Hong Kong-based Anchor Equity had bought it from CJ Foodville Co. in three installments between 2018 and 2020 for a total of about 450 billion won ($422 million).

Established in 2002 and currently operating over 1,400 stores, the coffeehouse brand is uniquely positioned as a premium dessert cafe, offering a variety of high-quality cake and dessert choices to differentiate itself from its peers, according to Carlyle.

"Carlyle will leverage its consumer and retail industry expertise, global network and resources to further strengthen the A Twosome Place brand, optimize its store footprint, and enhance its product offerings and marketing capabilities," it said in a statement.

A Twosome Place raked in 38.8 billion won in operating profit in 2020, up from the previous year's 35.7 billion won. Revenue climbed to 365.5 billion won, versus 331.2 billion won over the same period.

"There is a significant opportunity for further growth in the Korean market, and we look forward to benefitting from Carlyle’s extensive global experience in the consumer F&B space," A Twosome Place's CEO Young-Sang Yi said in the statement.

Anchor Equity had sought to exit from the coffeehouse chain via an initial public offering and issued a request for proposals to select an IPO manager last May. But the PE firm abruptly scrapped the IPO plan for what would have been South Korea's first listed coffee chain.

Carlyle's acquisition of the franchise comes after it terminated negotiations to buy the country's No. 2 bakery chain Tous Les Jours from CJ Foodville earlier this year due to price differences.

Instead, the PE giant poured $200 million into Kakao Mobility last February in a pre-IPO investment. Last year, it invested in KB Financial Group and formed a strategic alliance with the company to collaborate on new investment opportunities both in Korea and overseas. Carlyle also established a strategic partnership with Korean Re, the country's top reinsurer, to explore co-insurance opportunities.

Its recent exit deal in South Korea was the sale of ADT Caps, the country's second-largest security services provider, to SK Telecom and Macquarie in 2018.

Carlyle is expected to further expand its footprint in Asia’s financial sector under the leadership of Kewsong Lee, who was appointed as its sole CEO in July 2020.

In South Korea's coffeehouse franchise market, Seoul-based IMM Private Equity sold Hollys Coffee to the country’s chemical-to steel-focused KG Group in September 2020. It made the exit in its third attempt.

Another coffee franchise operating in Korea, The Coffee Bean & Tea Leaf is understood to have been up for sale by Jollibee Foods Corp., a fast-food giant in the Philippines, which acquired the coffee chain for $350 million in 2019.

(Updated on Nov. 22 to add the value of the deal)

Write to Chae-yeon Kim at why29@hankyung.com
Yeonhee Kim edited this article.