London Bagel Museum, which has ignited a bagel fad in South Korea, has drawn strong interest from multiple investors from abroad for its stake sale amid an insatiable appetite for Korean food across the globe spurred by popular Korean pop culture.
According to investment banking sources on Friday, LBM, the operator of Korea’s bagel franchise London Bagel Museum, has received letters of intent from 10 potential investors – both strategic and financial investors including those from overseas – for its stakes.
It is expected to name preferred bidders this month, the sources said.
LBM, which also operates other bakery franchises such as Artist Bakery, Café Layered and Café Highwaist in Korea, is said to have invited investors to the stake investment deal based on about 300 billion won ($206 million) valuation for its 100% holdings.
However, the total funding size was not disclosed.
Last October when LBM picked The Bank of America as the manager to lead its stake sale, it was reported to plan to raise about 100 billion won for business expansion at home and abroad.
BAGEL CRAZE ACROSS THE NATION
LBM opened the first store of its bagel bakery London Bagel Museum on a tourist-crowded street in Anguk in the old downtown of Seoul in 2021.
Immediately after its opening, on top of the store’s very distinctive British feel, its crunch, golden-brown bagel on the outside and chewy inside went viral among bagel lovers, and the store has become a must-visit place among both locals and tourists.
Its popularity was also attributed to its rarity as it had operated only a few franchise stores across the nation until it lately added three new stores in Seoul, one in Suwon and one in the country’s popular resort island Jeju.
In a shift toward a more active expansion strategy, London Bagel Museum also plans to advance into Japan and Singapore this year.
London Bagel Museum is LBM’s cash cow, and some of its stores generate about $1.2 million in monthly sales.
LBM reported 12.6 billion won in operating profit on sales of 36 billion won in 2023.
K-FOOD GOES GLOBAL
The success of its stake sale depends on its global expansion potential like other Korean bakery and food franchise businesses, such as its bigger peer SPC Group, the operator of Korea’s largest bakery chain Paris Baguette as well as Paris Croissant.
SPC’s bakery brand, which operates more than 210 outlets in North America, aims to raise the number of its stores to 1,000 there by 2030. The Korean bakery conglomerate is also building a $160 million bakery plant in Texas – the company’s first production facility in North America.
The Korean bakery giant’s aggressive expansion comes as the world’s awareness of Korean food has increased thanks to popular Korean TV series and movies, as well as Korean pop music.
Global investors are expected to eye more on Korean food and beverage companies with healthy cash flow amid the ongoing Korean pop culture sensation, said an official in the IB industry.
Last July, Jollibee Foods Corp., the Philippines’ largest fast-food chain, took over a majority stake in Korea’s No. 3 coffeeshop operator Compose Coffee Co. in a $340 deal targeting the global expansion of the coffee franchise.
Offshore investors also show strong interest in a buyout deal for a 100% stake in Norang Food Co., the operator of Korean fried chicken brand Norang Tongdak, according to sources.
Founded in 2009, the fried chicken franchiser operates about 800 stores across Korea and raked in 97.3 billion won in sales in 2023.
The PE firms acquired the fried chicken brand operator in 2020.
By Da Eun Choi
max@hankyung.com
Sookyung Seo edited this article.
