By Rick Carew And Jonathan Cheng
in Hong Kong
in Seoul
Asia-focused private-equity fund Headland Capital Partners Ltd.
is seeking a buyer for Young Toys Inc., a fast-growing South Korean
toy maker, in a deal that could be worth more than $250 million,
according to people familiar with the situation.
Seoul-based Young Toys, creator and owner of the popular "Tobot"
television and toy franchise, is being shopped by Goldman Sachs
Group Inc. to global media and toy conglomerates as a potential
entree to South Korea's consumer market, with the potential for
building the brand across Asia, according to the people.
Tobot, a collection of transforming robot characters that
attracts a younger audience than Hasbro Inc.'s Transformers
franchise, could be attractive to bidders as part of a global trend
in the media industry toward distributing and monetizing content
across a broad range of platforms, from toys to television and
movies.
Young Toys is mainly a domestic operation today, but bringing in
a global investor would allow them to accelerate their planned
expansion into other parts of Asia, including Taiwan, Malaysia, the
Philippines, Singapore and Vietnam.
Headland purchased 96.5% of Young Toys for 60 billion won ($54
million) in December 2012. The relatively quick exit that Headland
is seeking comes after two years in which Young Toys grew
dramatically under the private-equity firm's ownership. Young Toys
could be well-positioned to receive a premium valuation as the
Tobot brand has become one of the most sought-after holiday gifts
for children in Korea.
The deal would also tap into the influence of South Korea's
entertainment offerings across Asia markets, which already spans
television dramas, pop music and movies.
Young Toys' business has been expanding rapidly and is on track
to generate between 25 billion and 30 billion Korean won of
earnings this year before interest, taxes, depreciation, and
amortization, according to people familiar with the situation. That
measure of cash flow, commonly known as Ebitda, grew from 17
billion won last year on 76 billion won of sales.
The deal would mark an attractive exit for Headland Capital
Partners. If the private-equity firm and its bankers can sell the
company at the valuation they are seeking, they would see their
investment multiply fourfold in just two years.
Headland Capital Partners raised its current $1.3 billion
private-equity fund while it was the Asian private equity arm of
HSBC Holdings PLC. Headland's partners led a management buyout of
the private-equity firm in 2010 with HSBC still holding a 19.9%
stake in the management company after the buyout.
Write to Rick Carew at rick.carew@gmail.com and Jonathan Cheng
at jonathan.cheng@wsj.com
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