By Asian Venture Capital Journal
According to AVCJ Research, this is the private equity firm’s first direct investment in Japan. Affinity – whose core markets are Greater China, Korea, Southeast Asia, and Australia and New Zealand – is currently in the market raising its fifth pan-regional fund, which has a target of $5 billion.
The deal with Affinity will expand the footprint of the Burger King brand in Japan and strengthen its presence in the Asia Pacific region, Restaurant Brands International (RBI) said in a statement. RBI is owned by 3G Capital and controls the Tim Hortons and Popeyes brands in addition to Burger King.
Burger King entered Japan in 2006 through a joint venture backed by Korean conglomerate Lotte Group and currently has 98 restaurants in the country. They will continue to be operated by the existing franchisees. Korean media reported that Affinity will invest more than KRW50 billion ($44 million) with a view to reaching 200 outlets in five years.
The private equity firm acquired Burger King Korea in early 2016 from VIG Partners, paying KRW210 billion for a 100% interest. The business was a non-core subsidiary of Doosan Group when VIG assumed control in 2012. It expanded the chain from 130 to 240 restaurants. As of December 2016, there were 271 Burger King outlets nationwide.
Burger King Japan represents the country’s third fast food transaction this year involving private equity. In May, Endeavour United – a GP established by the team behind Phoenix Capital – agreed to buy Pizza Hut Japan from a Mitsubishi Corporation-controlled entity. It believes the business has been starved of investment and wants to expand the network of 370 outlets.
The Endeavour deal came soon after Bain Capital Private Equity completed its exit from Domino’s Pizza Japan, Pizza Hut’s main competitor. It sold a 75% stake to Australia-listed Domino’s Pizza Enterprises in 2013 for JPY12 billion (then $123.4 million) and then utilized a put option to exit the remaining 25%.