이 기사는 2020년 03월 02일 08시00분 thebell에 표출된 기사입니다

South Korea’s IMM Private Equity has completed the recapitalization of its portfolio company Hollys F&B.

IMM PE has completed a 110 billion won recapitalization of Hollys F&B, the operator of coffee chain Hollys Coffee, sources familiar with the matter said February 26. The recapitalization was arranged by Shinhan Bank and Shinhan Investment Corp.

In the third round of recapitalization of the coffee chain, IMM PE raised about 110 billion won. Of the amount, 65 billion won have been used to refinance the existing debt for the acquisition – which is slated to mature this year – with the remaining new debt, worth about 35 billion won, used to pay a dividend.

The Seoul-based firm bought a majority stake in Hollys F&B for 45 billion won in 2013, followed by injecting additional capital worth 37 billion in the following year – all financed through its flagship fund IMM RoseGold II.

On the back of improvement in Hollys Coffee’s earnings, IMM PE conducted the recapitalization of the coffee chain in 2016, taking on new debt worth 40 billion won. In the following year, it conducted another recapitalization, raising the company’s debt level to 65 billion won. And with the completion of the third round of recapitalization this year, the PE firm has successfully collected the invested money.

This will likely work in favor of IMM PE’s exit strategy for Hollys Coffee too, reducing its efforts to get consent from limited partners for extending the term of IMM RoseGold II, through which the firm invested in the coffee chain. This means the firm would buy more time to negotiate with potential buyers.

In 2016, IMM PE attempted in vain to sell its stake in Hollys Coffee, because it failed to agree with the buy side on the company’s valuation. Since then, it has focused on increasing the value of the coffee chain. Its efforts paid off, with the company’s EBITDA rising to more than 26 billion won in 2018 from 21 billion won in 2016 and 10 billion in 2013.

Several firms have already tapped the PE firm for a possible sale of the company. Whether the firm and potential buyers could reach an agreement on the company’s valuation will be key to a deal, industry watchers said.

(By reporter Kim Hye-ran)