South Korean mid-size apparel manufacturer The Nature Holdings Co. will be a strategic partner to Seoul-based private equity firm Centroid Investment Partners in its $1.7 billion acquisition of
TaylorMade Golf Co.
According to multiple sources from the investment bank industry on Sunday, Centroid Investment Partners, which would be buying out a full stake in California-based golf equipment maker, has picked The Nature Holdings as a strategic partner to bolster fashion line for the international brand.
The Korean apparel manufacturer will put up 100 billion won ($89.6 million) and can raise the equity stake through its exercise of the right of first refusal, an option to buy Centroid Investment shares in TaylorMade before others five to seven years later when the private equity firm decides to recoup investment.
The Nature Holdings is credited for grooming National Geographic brand as one of popular mainstream fashion brands in Korea. It expects the Kosdaq company would help attract young consumers that have emerged as major customers in the golf market to TaylorMade Golf apparel, it said.
Founded in 2004, The Nature Holdings has successfully expanded National Geographic outdoor clothing to life wears. The Nature Holdings, which owns domestic copyright of National Geographic brand, was listed on the secondary Kosdaq in July last year. Its market capitalization stood at 432.7 billion won as of last Friday.
Its average annual revenue growth has been 61.6 percent since 2017, higher than other industry players. Disney, license holder of National Geographic, has extended a long-term license contract with The Nature Holdings on brand use based on its abundant sales channel and marketing capability.
Centroid Investment had been searching for a strategic investor to boost apparel and fashion business of TaylorMade Golf, the world’s top 3 manufacturers of golf equipment that sponsors top players like Tiger Woods.
Despite its established brand awareness, TaylorMade’s presence in fashion sector is small. Its fashion apparels account for a mere 2 percent of its total revenue, significantly low compared with industry rivals Titleist (26 percent) and Callaway (22 percent).
Major retailers like Lotte, Shinsegae, and CJ, as well as mid-size apparel manufacturers including F&F, Hansae Co., and DY Holdings could vie to jump onboard when Centroid opens doors to other shareholders before readying the golf brand’s listing on the New York Stock Exchange.
Centroid is hoping to pool 800 billion won through acquisition loans and 550 billion won through mezzanine debt. The firm is projected to collect the remaining 600 billion won in equity form.
Major pension funds and mutual aid associations including MG Community Credit Cooperatives and Nonghyup have expressed interest to fund the acquisition.
The PEF projects to reduce ownership to 40 to 50 percent by the time of IPO.
By Kang Doo-soon, Kang Woo-seok, and Lee Eun-joo
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]