Private equity firm TPG has acquired a small-sized South Korean dietary supplement manufacturer for around $250 million, in its first Korean buyout deal in two years.
Under the agreement reached on Dec. 24, TPG bought 100% of Health Balance from Seoul-based private equity house Anchor Equity Partners Ltd., according to investment banking sources.
The health supplement company owns ginseng-based supplement and baby food brands, and a health food distribution firm.
The sources said the deal was valued at less than 300 billion won ($260 million), while local media reported it was worth between 280 billion won and 290 billion won ($241 million-$250 million).
The acquisition marked TPG’s first investment in Korea since 2017 when it bought a 30% stake in Kakao Mobility, a taxi-hailing and chauffeur services provider, for 500 billion won with co-investors and invested 360 billion won in a Korean PVC flooring tiles producer.
The buyout also represented the US private equity firm’s first Korean deal since it raised over $4.6 billion for its seventh Asia-focused fund, TPG Capital Asia VII, in February this year.
Anchor Equity, founded and headed by ex-Goldman Sachs partner Sanggyun Ahn, had acquired 100% of a Korean ginseng-based supplement company for 17 billion won in 2012.
Since then, it has made bolt-on acquisitions of a health food distribution company and two baby food producers and combined them under the name of Health Balance.
Its attempt to exit Health Balance failed in 2018 because of price difference with the final bidder Namyang Dairy Products Co. Ltd.
Encouraged by the successful sales of Korean food and beverage companies earlier this year, including Gong Cha, Anchor Equity put it back on the market. It replaced Goldman Sachs with Citigroup as the sale manager.
For the acquisition, TPG plans to raise about 100 billion won through acquisition financing and raise the remainder from its own fund and co-investors.
Health Balance posted a 9.3 billion won operating profit against sales of 158 billion won in 2018.
Meanwhile, Anchor Equity acquired management rights of Korean coffee house chain A Twosome Place in April from South Korea’s CJ Group, adding to its 40% ownership it acquired last year.
By Dong-hun Lee and Hugh YH Jeong
<Edited by Yeonhee Kim>