Creador’s investment in Loob

Creador’s 30% stake in Loob stirring interest

CREADOR’S purchase of a 30% stake in Loob Holding Sdn Bhd – the owner of milk tea brand Tealive – has reignited market interest in the food and beverage sector.

The private equity firm, known for its consumer investments including in Old Town White Coffee, MR DIY and Ecoshop, said that it had taken a 30% stake in Loob, which also has a few other lesser-known brands such as Tealive Eats and coffee chain Bask Bear Coffee.

Although some reports have put the stake sale value at up to Rm260mil, Creador founder and chief executive officer (CEO) Brahmal Vasudevan did not disclose the valuation of the deal when asked.

“We would have loved to buy more (than the 30%) but this is all the founders were prepared to sell at this stage because their business is growing and they see higher value in the future,” he tells Starbizweek.

Tealive has 600 stores in Malaysia and plans to hit 1,000 stores in three years.

Loob’s revenue of Rm307mil and net income of Rm58mil for financial year (FY) 2020 is understood to be one of the main reasons that the deal was sealed as the figures are considered impressive, especially in a time such as this when there is an ongoing pandemic which has hurt consumer spending badly.

Huge jump in profits

According to Brahmal, the Rm58mil made in FY2020 was purely from store sales, with no extraordinary items making up the profit.

“All the Rm58mil was from sales, no extraordinary gains, and we expect them to do even better, moving forward,” he says.

To be sure, in FY2018, Loob’s net profit came in at barely Rm2mil.

On the huge jump in profits, Brahmal says: “They started again after giving up the Chatime franchise, so this is a natural part of their ramp-up and we see lots of growth potential in years to come.”

“We love retail and consumer businesses that sell to a diversified base of consumers.”

He notes that the made-to-order tea market in Malaysia has been growing over 20% in the last few years and beverage chain per million population here remains underpenetrated compared with peers in the region and developed countries.

According to him, Tealive enjoys “a combination of outstanding passionate entrepreneurs, superb and great pricing/value-for-money products as well as strong branding and distribution.”

“We also see potential for expansion into neighbouring markets.

“Consumers are looking for fresh new ideas and the companies which can provide unique new concepts are positioned to do well,” he says.

To him, Tealive is “a great Malaysian story and has the capacity to be an incredible Asean story.”

Loob made corporate news when it was reported that it had plans to bring the company public.

However, founder and CEO Bryan Loo said late last year that uncertainties due to the Covid-19 pandemic had put a crimp in its plans for an initial public offering (IPO).

In a joint statement released on Thursday, Loob and Creador expressed confidence in the strategic partnership which they said would take Loob “to the next level”.

Loo, in the statement, said there were plans to open 100 to 150 Tealive stores each year, from now.

“We will continue to focus on our digital strategy and prioritising customer convenience including various cashless and contactless ordering channels – scan to order, order ahead and drive-in model across the store network,” he said.

Loob is Creador’s 39th investment since it started operations in 2011.

Nomura was the financial adviser for the deal.

Creador has investments mainly in two regions, namely South-east Asia and India.

Back home, the PE firm has recently been associated with the listing of MR DIY, the country’s largest IPO exercise since petrochemical group Lotte Chemical Titan Holding Bhd went to the market in 2017 to raise some Rm3.8bil.

One of Creador’s largest investments in South-east Asia, MR DIY raised Rm1.5bil via its IPO last October.

Since then, its stock price has more than doubled to over RM4 from its listing price of RM1.60.

“Consumers are looking for fresh new ideas and the companies which can provide unique new concepts are positioned to do well.”