Orchestra Private Equity has begun the process of divesting the South Korean operations of fast-food chain KFC, which has seen earnings growth since its acquisition in 2023, according to investment banking sources on Tuesday.
The Seoul-based private equity firm is expected to ask for around 400 billion won ($280 million) for the franchise operator — about four times its acquisition price and 10 times its earnings before interest, taxes, depreciation and amortization (EBITDA), said the sources.
It has recently hired Samil PwC as its sale manager.
In 2023, Orchestra Private Equity acquired full ownership of KFC’s South Korean operations for around 100 billion won, along with its domestic business license from South Korea’s KG Group.
Additionally, the homegrown buyout firm has secured master franchise rights from KFC’s parent company Yum! Brands Inc., gaining greater management autonomy from menu selection to promotional and marketing activities.
Yum! Brands has also invested in a project fund launched by Orchestrate PE for the acquisition.
Since its purchase, the fried chicken franchise in South Korea has posted steady sales growth and improved financial performance.
In 2024, its sales jumped 18% to 292.0 billion won compared to the previous year, while EBITDA rose 47%, supported by the opening of 15 additional outlets across the country.
FOOD FRANCHISES UP FOR SALE
The company’s estimated valuation aligns with those of other fast food franchise deals in recent years.
The divestment comes as several private equity firms are looking to unload food franchise assets amid a slowdown in the dining-out sector.
Burger King’s operations in South Korea and Japan, the homegrown burger chain Mom’s Touch and the chicken franchise Norang Tongdak have all been put up for sale.
By Da-Eun Choi
max@hankyung.com
Yeonhee Kim edited this article.
