THURSDAY, March 28, 2024
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Malaysia's Jaya Grocer stake sale

Malaysia's Jaya Grocer stake sale

PETALING JAYA - Private equity (PE) firms are eyeing a stake in Jaya Grocer, the local supermarket chain, with major names such as TPG Growth, Creador and a Japanese fund based in Singapore being shortlisted in a deal said to value the chain at around 175

 
 
Sources said the exercise for the sale of an equity stake began last year and would involve selling up to 49% per cent equity at a price of around RM85mil, valuing Jaya Grocer at RM173.5million.
 
Initially, the deal had involved an option of sale of up to 100% of the company, with the seller initially looking for a price of around RM200mil, another source said.
 
Among the other PE firms which were initially interested included Navis Capital Partners and the Abraaj Group.
 
Sources said Jaya Grocer, which is owned by Trendcell Sdn Bhd and which has 16 outlets, posted an earnings before interest, tax, depreciation and amortisation (Ebitda) of RM18million in financial year 2015 (FY15). This means that if the deal is valuing Jaya Grocer at RM175mil, it is giving the supermarket chain an Ebitda multiple of slightly less than 10 times. Jaya Grocer had yet to reply to queries from StarBiz as at press time.
 
Sources said the sale was being conducted through an open bid system by Deloitte on behalf of Jaya Grocer.
 
Jaya Grocer started in 2007 with its first outlet in Jaya 33 in Petaling Jaya. Now, there are 16 outlets mainly in the Klang Valley such as in The Intermark, Empire Shopping Gallery and KLIA2.
 
Based on Trendcell’s accounts obtained by The Star, the company reported a profit after tax of RM1.05million on the back of revenue of RM283.08million for its FY14 ended June 30, 2014.
 
This gives it a profit after tax margin of a mere 0.37%. The company has total assets of RM77.87million.
 
Jaya Grocer was founded by the Teng family, who are also the founding family of Giant Hypermarket and the well-known TMC (Teng MiniMarket Centre) in Bangsar.
 
The family sold the Giant chain to Hong Kong-based Dairy Farm group in 1999 for an undisclosed sum.
 
The Teng family also runs Pasaraya Hero, which it started in 2010. The family still owns the TMC store. It is unclear if the current sale process includes these supermarkets.
 
PE firms have been displaying a strong interest in consumer-related businesses. Navis, for example, had invested in Village Grocer (a competitor of Jaya Grocer) and the Big Group (that runs Ben’s Independent Grocer) and is said to be in talks to buy the Oriental Group of restaurants – a Malaysian-Chinese fine dining group.
 
Meanwhile, Creador is also an investor in convenient store chain 7-Eleven (M) Holdings Bhd and in soon-to-be-listed Bison Consolidation Bhd, the owner of the myNEWS.com press and convenience chain store. Bison is listing at a price earnings (PE) multiple of 25 times its FY15 earnings, while 7-Eleven is currently trading at a historical PE multiple of around 30 times.

 

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