Affinity to send teaser for Burger King Korea, Japan sale

Affinity Equity Partners is set to send an investment teaser this week for the planned sale of Burger King’s operations in South Korea and Japan, hoping to sell the entire stake of the burger franchise at more than $840 million.

Affinity and Goldman Sachs, the advisor for the sale, is scheduled to send the investment teaser this week to potential buyers, according to investment banking industry sources on Tuesday. Strategic investors and private equity funds were known to be interested, sources said.

The global PEF aims to sell the 100% stakes in Burger King Korea and Burger King Japan.

Burger King Korea generated some 80 billion won ($67.2 million) in earnings before interest, taxes, depreciation, and amortization (EBITDA) on sales of 680 billion won last year. The South Korean unit diversified sales channels including drive-through and delivery, improving revenue and profitability of outlets with 95% of stores logging profits in 2021. The franchise expected EBITDA to rise to 100 billion won this year.

Burger King Japan turned to black last year with EBITDA of 700 million yen ($6.1 million) as it near doubled the number of stores to 146 from 75 in 2018.

MORE THAN 10 TIMES OF EBITDA

Affinity was understood to expect a price tag of more than 1 trillion won ($840.4 million), over 10 times of EBITDA, as other food and beverage (F&B) franchises such as Gong Cha Korea, Hollys Coffee and A Twosome Place were sold at values of more than 11-14 times of EBITDA in South Korea.

Burger King Korea is a leading F&B franchise in digitalization with 1.7 million customers using its app and website, the second-largest after Starbucks in the country.

The fast-food company is the No. 3 burger franchise in South Korea with 440 restaurants as of January, exceeding McDonald’s 403 stores. The company plans to raise the number to 600 in two to three years, opening more outlets in non-capital areas.

“Burger King India recently listed on the local stock market with its corporate valuation recognized at 20-30 times of EBITDA. Burger King UK is also seeking a listing in London with an enterprise value of double-digits. The brand is making a series of successful debuts in the global capital markets,” said an IB source.

Write to Jun-Ho Cha at chacha@hankyung.com
Jongwoo Cheon edited this article.