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KKR to take 'significant stake' in V3 with up to S$500m investment

Amount values V3, the owner of the OSIM and TWG Tea brands, at an enterprise value of about S$1.7 billion

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From left: Jaka Prasetya, partner, KKR; Keith Magnus, chairman, Evercore Asia; and Ron Sim, founder, executive chairman and CEO of V3 Group.

Singapore

PRIVATE EQUITY firm KKR is taking up a "significant stake" in massage chair and lifestyle products group V3, the owner of the OSIM and TWG Tea brands said on Tuesday.

KKR will invest up to S$500 million in V3, valuing V3 at an enterprise value of about S$1.7 billion.

Both parties declined to comment on the exact mix of equity and debt financing. KKR is making the investment from its Asian Fund III.

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Keith Magnus, chairman of Evercore Asia, which advised V3 on the deal, told The Business Times: "The investment by KKR represents a more than 50 per cent increase in enterprise value compared to when the group was taken private. This is a phenomenal premium for Mr Sim."

Ron Sim remains the chairman, chief executive and controlling shareholder of V3. He said: "I am extremely pleased to welcome KKR as a significant shareholder in V3. I am confident this investment will position the company for our next phase of growth, starting with the immediate expansion of TWG Tea in Japan and the US and of OSIM in China.

"We would also be looking into M&A opportunities that are earnings accretive."

KKR partner Jaka Prasetya said the investment underscores KKR's strong belief in the continued growth of the region's consumer sector: "We aim to provide support and capital to successful home-grown, regional companies like V3 in order to capture opportunities across Asia and beyond."

In April 2017, Mr Sim had applied for V3 to be listed on the Hong Kong Stock Exchange via an initial public offering (IPO), but that application lapsed in October of the same year.

Mr Sim told BT in June that he wasn't in a hurry to proceed with an IPO, since an IPO is a function of valuations, and he was busy with many private options too.

He's still in no hurry to push through an IPO, he told BT on Tuesday: "In the past year, V3's performance has grown from strength to strength. Our organic growth has been very strong, driven by contributions from our businesses like OSIM, TWG Tea, as well as franchise rights to the GNC nutritional supplements brand in Singapore, Malaysia, Taiwan, and the Philippines. With this strong base, we believe that we should keep our options open and not rush into an IPO, for example."

Before Mr Sim repackaged his company as the V3 Group last year, it was known as OSIM International, and was listed on the Singapore Exchange. Mr Sim privatised OSIM in 2016 with a cash offer that valued OSIM's equity at S$1 billion. OSIM then acquired Futuristic Store Fixtures, a Singapore-based manufacturer of store fixtures, for around S$100 million.

Headquartered in Singapore, V3 has a presence in over 100 cities in 26 countries around the world. The largest chunk of V3's revenue comes from sales of OSIM massage chairs.

V3's annual revenue climbed back above the S$600 million mark last year, reversing the revenue decline owing to store closures in China in prior years. Profit also rose, Mr Sim said.

Deal activity in South-east Asia's consumer retail space remains strong. Mr Magnus said: "The luxury lifestyle and wellness industry continues to be a sector of exciting growth in Asia, proliferated by rapidly rising consumer affluence throughout the region."