Caffeine continues to provide a fix for deal makers

Yesterday saw a story break that the South Korean private equity firm IMM Private Equity is considering making an investment in Holly’s F&B, one of South Korea’s largest independent coffee chains.

Coffee culture shows no sign of slowing down despite the tough economic times that many consumers have had to endure over the last few years. Ironically, when you look at deals involving coffee chains and retailers, deal values have remained remarkably strong in four of the last five years. In fact, 2012 saw 18 deals totalling $ 1.4bn of announced transactions involving coffee retailing targets, and was driven by private equity buyers which accounted for 5 of those deals.

Almost one year ago to the day (23rd July) also saw the largest transaction recorded by value, the $ 974m acquisition of Peet's Coffee & Tea, the US-based coffee store chain, by Joh A Benckiser, a privately-held group that focuses on long term investments in the consumers goods market, and BDT Capital Partners.

Whilst the investment in Holly’s is rumoured to be only around $ 44m, so not comparable in size to the Peet’s deal, it does demonstrate that there are some consumer markets that are still potential growth sectors and have the ability to attract private equity investors which wish to capitalise on this.