Kohlberg Kravis Roberts: Oriental Brewery

ASIA WINNER — LARGE CAP Kohlberg Kravis Roberts: Oriental Brewery Korea is not a market renowned for grew by 80 percent, with EBITDA 132% number of other operational levers giving foreign private equity firms increasing 108 percent during the OB Golden to achieve growth. access to well-loved domestic busi- same period and market share rising Lager volume Geographically, KKR supported nesses and letting them reap the by 20 percent. growth OB’s expansion into Korea’s southern rewards of their investment. Thanks in part to the successful 80% region, by targeting new wholesalers Luckily for Kohlberg Kravis Rob- re-launch of beverage lines including Sales growth, and new cities to gain market share erts, this deal involving Korea’s Ori- OB Golden Lager and Cass Light – 2009-13 in an area previously dominated by ental Brewery, once part of the con- which have experienced 93 percent its competitor. glomerate Doosan Group and maker and 132 percent volume growth 108% Moreover, the firm supported of the popular Cass Beer, turned out respectively since their re-launch EBITDA the appointments of key manage- growth, to be an exception. in 2010 and 2009 – KKR Capstone 2009-13 ment, including IS Chang – who’s KKR, one of the world’s largest helped OB regain its leadership posi- now the chief executive of OB – as private equity firms, acquired OB tion in the Korean market by 2012. 5.3x head of sales, and Alex Song as chief in May 2009 from Anheuser-Busch “[KKR helped] get it back to a Return multiple marketing officer. The institution of a InBev in a $1.8 billion deal. number one position in the market, on exit high-quality sales management team Subsequently, KKR sold 50 per- [which OB] hadn’t held in 15 years contributed to an 80 percent rise in cent of its investment to pan-Asian … [Given] the 20 percent increase in sales between 2009 and 2013. private equity firm Affinity Equity market share in a fairly competitive KKR also bolstered capital invest- Partners, whose investment team [market], and the scale of the effort ment in OB’s three production facili- collaborated with the US-based here, [because] OB is a very large ties from $30.7 million in 2009 to group on its highly successful entry company … To move the needle that $92.2 million in 2013, in order into and exit from the business. much on this business meant it was to modernise equipment, expand KKR and Affinity then sold the the deserving candidate,” said judge operations and introduce greener business back to AB InBev in January Suvir Varma, Asia head of private production methods. this year, with the business’ former equity at Bain & Company. Judge Robert Partridge, manag- owners paying $5.8 billion to the As well as successfully re-launch- ing partner at EY, explained: “They private equity pair. KKR has not ing old brands, KKR Capstone, along OB: success was demonstrated that [they could disclosed its financial return on the with KKR and Affinity, pulled a brewing for KKR change the organisation] – with the deal, but sources suggest the firm new management they brought in, in reaped a 5.3x exit multiple and a what I would describe as a market gross IRR of about 42 percent. where bringing in management While the KKR and Affinity invest- itself is a major challenge, but also ment team worked closely with the in making sure its workforce was portfolio company, the operational trained and could cope with the value was largely driven by KKR’s added capacity and increased brand operating unit KKR Capstone. investment and expansion.” n Indeed, the return was well- deserved since during its ownership, KKR Capstone spent between 10 and HIGHLY COMMENDED Pacific Equity Partners — Spotless 15 days per month with the business. Group Between 2009 and 2013, revenue Pacific Equity Partners — Asaleo Care november 2014 the operational excellence special 2014 39.

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