Singapore’s sovereign growth fund GIC Private Ltd. plans to acquire a 30% stake in Starbucks Korea for about 800 billion won ($710 million) from Starbucks Corp., which currently owns half of the biggest coffeehouse in Korea.
According to investment banking sources on May 24, the US coffee franchise giant will likely sell the remaining 20% stake to E-Mart Inc., an affiliate of Korea’s retail group Shinsegae, effectively exiting more than two decades of investment in Korea.
GIC, formerly known as Government of Singapore Investment Corp., is in talks with Starbucks Corp. to buy the 30% stake, valuing Starbucks Korea at 2.6 trillion-2.7 trillion won, the sources said, confirming an earlier report by The Bell, a local online media outlet.
E-Mart, which already owns a 50% stake in Starbucks Korea, will eventually own 70% if a deal is closed.
Industry sources said in mid-March that Shinsegae was reviewing ways to wholly own Starbucks Korea as Koreans’ taste for coffee continues to grow at a brisk pace. In 2020, the country’s coffee imports surged to a record 176,648 tons, up 28% from the previous year.
Starbucks Korea, established in 1997 as a 50:50 joint venture between E-Mart and Starbucks Corp., opened its first branch in 1999 and has expanded to 1,503 branches as of December last year.
Starbucks Korea’s revenue now exceeds 10% of Starbucks’ total revenue generated globally, but its operating margin falls behind the global average.
Starbucks currently holds the highest coffee franchise market share in Korea, surpassing 1 trillion won ($885 million) revenue in 2016 and maintaining more than 20% year-over-year growth rates from 2017 to 2019, at 26%, 20.5% and 22.8%, respectively.
Last year, Starbucks Korea generated an operating profit of 164.4 billion won on 1.93 trillion won in revenue.