This article was published on Feb. 10, 2025, at 10:44 a.m. on the ChosunBiz MoneyMove site.
JKL Partners, a domestic private equity fund (PEF) operator, is seeking to acquire the bakery brand London Bagel Museum's operating company, LBM. It has been reported that London Bagel Museum has received offers for management rights since last year and is seeking investment in the range of 100 billion won, but it seems to have turned back toward a sale.
According to the investment banking (IB) industry on the 10th, over 10 financial investors (FIs) and strategic investors (SIs), including JKL Partners, have expressed interest in acquiring LBM, the operator of London Bagel Museum. Bank of America (BoA), the lead underwriter for the funding, is reportedly also acting as the sale's underwriter.
Rumors of the sale of London Bagel Museum have emerged since last year, but it is known that there are still differences between the selling and acquiring sides regarding valuation. The selling party, LBM, is asking for a corporate value in the range of 300 billion won. The company reported a revenue of 36 billion won, operating profit of 12.6 billion won, and net profit of 11.3 billion won for 2023.
LBM is reported to have claimed it would record 20 billion won in earnings before interest, taxes, depreciation, and amortization (EBITDA) as of last year. Even recording 20 billion won in EBITDA puts its valuation at a high level of 15 times EV/EBITDA. Typically, the EBITDA multiples for the food and beverage (F&B) industry range from 10 to 12 times, with peaks reaching 14 to 15 times during particularly high valuation periods.
An industry source in the IB sector noted, “London Bagel is a popular brand, but from the operator's standpoint, assurance is needed that this item can have long-term potential,” adding, “Operators who do not have deep understanding of F&B trends may find it difficult to invest rashly.”
Another IB industry source stated, “Valuation cannot only be determined by EV/EBITDA; it can vary greatly depending on several conditions,” explaining, “For instance, if the company holds a significant amount of cash, its valuation will increase accordingly.” They added, “If a global private equity firm is urgently seeking investment, this could be a worthwhile opportunity.”
However, LBM denies intentions of a sale. A representative stated, “It is about attracting investment, not a sale,” and “We plan to focus on expanding into Japan through investments this year.”
LBM started as Cafe RAY in Anguk-dong, Jongno-gu, Seoul, in 2017. Cafe RAY gained popularity due to its emotional branding and unique dessert menu. London Bagel Museum, which opened its first store in 2021, also succeeded in the market with its exotic feel and chewy bagels. Currently, it operates stores in five locations, including Dosan, Jamsil, Suwon, and Jeju.
LBM holds several cafe and bakery brands, including London Bagel Museum, Artist Bakery, and High West. It is also preparing to expand into Japan and Singapore. The largest shareholder is Director Lee Sang-yeop, who reportedly holds 51% equity. Other key shareholders include Director Kim Dong-jun (29%), Chief Brand Officer (CBO) Lee Hyo-jung (15%), and current CEO Kang Kwan-koo (5%).