Hong Kong-based Fung Retailing Ltd. has taken a 70 percent stake in Suhyang Networks, a South Korean children’s apparel maker.
The acquisition by Fung Retailing was completed with funds managed by private equity firm AEA Investors. The dollar amount for the acquisition stake wasn’t disclosed, but the price tag is reportedly 200 billion Korean won, or $188 million at current exchange.
Fung Retailing is a privately held company that is a wholly owned subsidiary of Hong Kong-based Fung Group. Fung Group is privately held by Fung Holdings (1937) Ltd., which is a substantial shareholder of Li & Fung Ltd., the trading company that is publicly listed on the Hong Kong Stock Exchange.
Suhyang operates more than 210 shops-in-shop in department stores in Korea, in addition to nine outlet stores and three multibrand shops, for its baby and children’s brands Minkmui, Bluedog, R.Robot, Denim in the Box and Lulabee.
According to Andrew Postal, managing partner of MMG, who worked on the deal representing Suhyang, Suhyang’s chief executive officer, Jayson Suhr, will continue at the company, as will his entire management team.
The acquisition is in line with Fung Retailing’s plans to expand its portfolio of baby and children brands and work with local partners to leverage its expertise to include the introduction of international and European brands into Korea. The plan is also for Suhyang to expand its brands overseas. Sales at Fung Retailing in 2011 were more than $1 billion via its presence from Greater China to Korea, Singapore, Malaysia, Thailand, Indonesia and other Southeast Asia countries that have a combined retail network of more than 2,900 stores.
Postal, who is spearheading MMG’s investment banking presence in Korea, expects increased activity in that country on the mergers and acquisitions front.
“South Korea is interesting. It is the cultural capital of Asia…has a sophisticated retail environment [and] upscale consumers like Japan did in the 1980s,” the investment banker said.
Unlike deals that have the potential to be riskier in China unless one is partnering with someone on the ground, Korea has “real transparency in terms of its [accounting], real branding and significant capabilities. It’s an attractive market [with] well-funded companies, and the country is a true open marketplace,” Postal added.
Andreas Kurz, president and owner of fashion consultancy firm Akari Enterprises, said Korea is a dynamic market in Asia given that the firms “have cash and want to buy brands.” He explained that while global firms need to keep an eye on China, that’s still a longer-term play. Korea, with its better-developed infrastructure and business base, can provide immediate accretion to a firm’s bottom line.