TPG said on Friday it has sold its stake in the Myanmar Distillery Company (MDC) to Asia spirits group Thai Beverage for $494.4 million, a home run on its investment at a time when it is raising capital for its next string of deals in the region.
ThaiBev, run by billionaire Charoen Sirivadhanabhakdi, said in a separate statement said it had bought a 75% stake in MDC from TPG and other parties for a combined $742 million.
TPG acquired a 50% stake in MDC in 2015 for $150 million, a person familiar with the matter said, indicating it has made over three times its original investment in less than three years.
TPG is in the midst of raising over $4 billion for its seventh fund for investing in Asia, TPG Asia VII, said another person close to the company. Renowned for sourcing deals in far-flung emerging markets across Asia, TPG’s investment in MDC is typical of its penchant for backing consumer-facing companies riding the growth of the region’s burgeoning middle class.
For its latest fund, TPG is likely to continue to focus on the consumer sector as well as financial services, health care and increasingly new technology at Asia’s disruptive innovators. A successful exit of MDC could give an extra fillip to its fund-raising drive.
Distilling MDC’s operations
Yangoon-based MDC is the largest spirits company in Myanmar by sales and is the producer of whisky brand Grand Royal. The brand employs more than 2,500 staff and supports local businesses through its network reaching 1,300 wholesalers and over 20,000 retailers.
Founded in 1995, the company produces and sells a range of spirits including whisky and gin. It operates two distilling, blending, and bottling facilities in Yangon and Mandalay.
Fort Worth and San Francisco-headquartered TPG said in a statement on Friday that it had introduced improvements at MDC to operations and earnings in areas such as lean manufacturing, e-procurement and branding.
“These initiatives resulted in considerable growth in the business over a short period of time,” said Ganen Sarvananthan, a partner at TPG, in a statement.
Core earnings have grown sharply during TPG’s ownership, according to the first person familiar with the matter.
TPG’s senior advisors, former Diageo executive Paul Walsh and Myanmar-returnee and previous Goldman Sachs banker Thura Ko Ko, worked with MDC’s management on the improvements.
MDC marks TPG’s second investment in Myanmar, following the firm’s investment in Apollo Towers in 2014. Since then, the Apollo complex has received additional investment, including a long-term financing facility from the Overseas Private Investment Corporation in 2016.
TPG’s other investments in Southeast Asia have included 8990, BFI Finance, Property Guru, and Vietnam Australia International School.
