Hong Kong-headquartered private equity company Affinity Equity Partners has been named in a list of prospective bidders for the Tesco Homeplus business in South Korea.
British retail giant Tesco has still not officially announced plans to sell its Korean operation – but with details leaking daily the process appears to be well down the track.
In the latest reports picked up by Reuters, at least six companies have been invited to submit bids, with the leading contenders US based KKR & Co and Carlyle Group, both leading private equity investment companies.
London-based CVC Capital Partners, Affinity Equity Partners and Asia-focused MBK Partners were also invited to bid, according to unidentified sources quoted by Reuters.
Tesco is expected to fetch between US$5 and $7 billion for the Tesco Korea Homeplus business, which it maintains is profitable, despite falling same store sales. It will use the funds to reduce debt and invest in restructuring its core operations in the UK which have been hit hard by competition from German discount rivals at the bottom end and upmarket grocers at the other.
According to Reuters, a Homeplus spokesman said the company “does not comment on rumours”. Not one of the private equity companies named in the reports has issued any comment – significantly, none have denied any discussions are under way.
The only company which has commented is Hyundai Department Store which said it would consider a bid via its Department store business if a formal sale process commenced. However with a market value of $3 billion, it’s hard to see how it could buy the business without the involvement of a PE partner.
Tesco says on its website it has more than 400 stores in Korea, along with 500 franchised stores, and serves more than 6 million customers every week.