This article was published on Jan. 13, 2025, at 10:52 a.m. on the CHOSUNBIZ MoneyMove site.
Stella Investment, a domestic private equity fund (PEF) manager, has sought to acquire Guri Cheongwa, a fruit wholesale company. However, the PEF manager that owns Guri Cheongwa has stated that the sale process has not yet been officially initiated, making it difficult to predict who the new owner will be.
According to investment banking (IB) industry sources on the 13th, Stella Investment is working to acquire 100% of the equity in Guri Cheongwa from PEF managers Whale Investment and Four Seasons Capital Partners. The two managers purchased 100% of the equity in Guri Cheongwa for 28.5 billion won from Lee Min-joo, chairman of Atinum Partners, in 2019.
The sale price is reportedly in the mid-40 billion won range, but Whale Investment and Four Seasons Capital Partners have noted that they have not yet formalized the sale. The two managers are expected to select a sales advisor in the second quarter. Last year, they selected KB Securities as the sales advisor and explored the sale, but while some strategic investors, including OURHOME, expressed interest, the deal could not be finalized.
In addition to Stella Investment, multiple financial investors (FIs) and strategic investors (SIs) are said to be showing interest in Guri Cheongwa. The fruit wholesale business has high entry barriers and steady cash flow, making it a preferred option in the merger and acquisition (M&A) market.
The operation of fruit wholesale businesses is a monopoly business that can only be run by designated companies under the 'Act on Distribution and Price Stabilization of Agricultural and Marine Products.' Guri Cheongwa's licensing period runs until June 2030. An IB industry source said, 'If the cash flow is good and the competition is less, it is a desirable asset as long as the price is not too high,' adding that 'the low level of borrowing funds is also an advantage.'
Established in 1997 as a wholesale corporation in the Guri Agricultural and Marine Products Wholesale Market, Guri Cheongwa operates as an intermediary for the sale of agricultural products. It receives consignment sales of fruits or vegetables from producers and sells them in the wholesale market, earning a commission in return. It also provides distribution information such as trends by item and bid prices.
Guri Cheongwa operates in the Guri Agricultural and Marine Products Wholesale Market, which ranks third nationally in terms of auction size, following Seoul's Garak Market and Gangseo Market. It is the top-performing company among the three fruit wholesale companies in the market. In 2023, it transacted 296 billion won worth of fruits. The earnings before interest, taxes, depreciation, and amortization (EBITDA) is around 3.8 billion won.
Stella Investment was established in 2020 by Tae Hyo-seob, who has experience with CVC Capital Partners and Merrill Lynch. Since its inception, it acquired the American energy storage system (ESS) company KeyCapture Energy jointly with SK Innovation E&S for $600 million (880 billion won) in 2021. Tae joined as a founding partner of SJL Partners in 2018 and oversaw transactions for companies such as Momentive Performance Materials and Celltrion.