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Centroid uses Acushnet deal as reference when picking its partner The Nature Holdings accepts investment structure favorable to Centroid

Translated by Kim So-in 공개 2021-06-17 07:54:19

이 기사는 2021년 06월 17일 07:49 더벨 유료페이지에 표출된 기사입니다.

Seoul-based private equity (PE) firm Centroid Investment Partners has selected The Nature Holdings, a mid-size apparel manufacturer, as its strategic partner in its acquisition of TaylorMade, using Mirae Asset Global Investments and Fila Korea’s acquisition of Acushnet as a reference.

Centroid has picked The Nature Holdings, which is known for its licensed brand National Geographic, as its strategic partner, according to sources Tuesday. The Nature Holdings will invest 100 billion won ($89 million) in the deal to establish a joint venture with the PE firm.

Centroid has partnered with the relatively new apparel manufacturer instead of the nation’s retail giants like Lotte and Shinsegae and platform company Kakao as the company has accepted an investment structure which is more favorable to the PE firm.

The Nature Holdings has secured the right of first refusal when Centroid divests its investment in the future. The Nature Holdings may exercise its right based on the fair value.

Other major strategic investors, which considered possible participation in the deal, reportedly didn’t accept such condition. It is said that a contract which grants a call option every year under the condition of guaranteeing a certain rate of return was excluded from the early stage.

This comes from the strategic decision to avoid the paradox of Acushnet's success. Mirae Asset Global Investments structured the Acushnet deal where Fila Korea, the strategic investor, acquires shares every year. Even if Acushnet grew rapidly and was listed on the New York Stock Exchange, the financial investor failed to generate high returns whereas Fila Korea pocketed much of the returns.

In 2011, Fila Korea acquired 100% of Acushnet with Mirae Asset Global Investments and other financial investors for $1.25 billion. Financial investors put around $600 million while $500 million came from acquisition financing.

Fila Korea secured a 12.5% stake in Acushnet for $100 million and pushed up its holdings to 33.1% for the next five years. After Acushnet went public in 2016, Fila Korea bought 20% more from its business partners to be the controlling shareholder.

Fila Korea has grown to the leading apparel company with revenue of 3 trillion won, but financial investors generated an internal rate of return of 15~17%, which is lower than they had expected.

The Nature Holdings is credited for successfully expanding National Geographic outdoor clothing to life wears. The Nature Holdings’ revenue has grown at an annual average rate of nearly 62% since 2017 thanks to National Geographic’s rapid growth.

The apparel business has to achieve stronger and faster performance so that Centroid, which needs to recoup its investment in five to seven years, could generate hefty returns. (Reporting by Se-hun Jo)
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