Philippines-listed Aboitiz Equity Ventures is taking control of the poultry-to-fish food group Gold Coin, a bet on the trend towards a more protein-based diet across Asia.
Peter Zuellig’s closely held Golden Springs Group said on Friday it had agreed to sell 75% of Singapore-headquartered Gold Coin at an implied enterprise valuation of $550 million and 12.5 times 2017 Ebitda.
“As the 500 million people in Asean become more affluent they will eat more meat and fish; so the prospects for the business look good,” said Zuellig, a scion of the Swiss Zuellig dynasty during an interview with FinanceAsia.
Aboitiz’s food arm, Pilmico International, had to fend off competition for Gold Coin during an auction which kicked off in February. US and European animal feed companies had been keen to establish a platform across the relatively fast-growing economies of Southeast Asia.
Established in 1953 in Singapore, Gold Coin has operations across 11 countries, including Indonesia, Malaysia and Vietnam.
While Zuellig, who was born in the Philippines, could have got a higher price from one of the international feed giants he preferred to let control of Gold Coin go to the Aboitiz family, whom his own family has known for generations.
"A company has a right to continue, it was always attractive to me that Gold Coin wouldn't just be a platform for somebody to step into Asia but for somebody within Asia to step up," said Zuellig during the interview.
His holding company Golden Springs, will retain a 25% stake in Gold Coin.
"You have to leave something on the table for the next owner, particularly if you are going to stay in the business. You can't sit comfortably across from the table from your partner if he knows you've been squeezing the business," said Zuellig.
Gold Coin is one of the largest animal feeds firms in Southeast Asia by capacity. It has a milling capacity of 3.1 million tonnes per year, with 21 production facilities and 3,000 employees.
When 68-year-old Zuellig was an apprentice at Gold Coin he used to tramp around the mills, afterwards finding weevils in his pockets and all sorts of bugs under the mat in his car. In one mill Gold Coin staff kept two pythons who caught rats between the feed bags.
For the financial year ended December 31, 2017, Gold Coin generated net revenues of $751 million and Ebitda of $44 million.
Investor interest in animal feed firms appears to be growing in Southeast Asia. Shares in Japfa Comfeed Indonesia and Charoen Pokphand Indonesia are both up strongly this year.
In another transaction illustrating investors’ mounting interest in the sector, KKR bought a 7.5% stake for $150 million in Vietnam's Masan Nutri-Science, In April last year. In 2016, Masan Nutri-Science sold over 2.5 million tons of animal feed generating $1.1 billion in sales. However, the deal is not directly comparable to the purely feeds group Gold Coin sale as Masan Nutri-Science has an integrated supply chain, including farms; also KKR only took a minority stake.
Gold Coin was passed to Zuellig by his family a few years ago and now he is selling as part of his succession plans and to raise cash to pay back loans to his family. His daughter is not involved in the business, according to a person familiar with his business arrangements.
Aboitiz’s Pilmico plans to use this acquisition to jump-start the growth of its feed milling business outside of the Asean bloc and into the rest of Asia.
“This acquisition will add three million metric tons of volume which quadruples our overall feeds production capacity,” said Sabin M. Aboitiz, Aboitiz Equity Ventures' chief operating officer and Pilmico president.
Credit Suisse acted as Zuellig's financial advisor on this transaction. Morgan Stanley advised Aboitz.
