By Sundeep Tucker in Hong Kong 2010-02-26
Global private equity groups are considering the sale of profitable Asian units to pay down debts held by their portfolio companies in the US and Europe.
Bain Capital, the US private equity fund, is in talks to divest the north Asian business of Outback Steakhouse, a global restaurant chain.
The company was acquired by a Bain Capital-led consortium in 2007 for $3.2bn, but sales at its core US operations have fallen making it tougher to meet debt repayments.
Bain Capital has hired Goldman Sachs to find a buyer for Outback Steakhouse’s operations in South Korea, Japan and Hong Kong, to raise finance to restructure the company’s global debt and re-invigorate the chain in the US.
Dealmakers said that other private equity groups were actively weighing the sale of assets in Asia owned by their global portfolio companies.
These include Platinum Equity, a Californian private equity fund, which is seeking to offload some of the coveted Asian operations owned by Acument Global Technologies, a portfolio company that is a leading global producer of mechanical fasteners.
People familiar with the matter said that Platinum Equity had hired Goldman to handle the sale, which should yield about $300m and help to restructure group debt.
Goldman declined to comment about either the Outback Steakhouse or Acument asset sales.
“A lot of portfolio companies need cash to solve debt problems in the US and Europe,” said one dealmaker familiar with both sale processes. “In many cases the Asian assets are non-core and attractive to buyers and these proceeds can boost the remainder of the group.”
The Financial Times has reported that Terra Firma, the UK private equity group led by Guy Hands, has explored selling Japanese assets belonging to music company EMI to help pay down global debt on EMI, which it owns.
Bain Capital also last year sold the Asian assets of American Standard, the global bathroom and kitchen products supplier, which it acquired in 2007.
According to people familiar with the matter, the sale of Outback Steakhouse has interested local restaurant groups in South Korea, where more than 100 of the 118 Asian outlets are located.
The sale has also alerted foreign private equity groups including Permira, the UK fund, which is stepping up its activity in the region.
A buyer of the operations is also likely to acquire the rights to develop the Outback Steakhouse brand in China, where South Korean companies are searching for expansion opportunities.
The sale of the assets could fetch between $200m-$300m, said people familiar with the matter.