Gong Cha's planned $2 billion sale draws private equity interest, sources say

By Yantoultra Ngui and Kane Wu

SINGAPORE/HONG KONG, May 11 (Reuters) - Bubble tea chain Gong Cha has attracted suitors including buyout firms Bain Capital and General Atlantic in a deal that seller TA Associates expects will fetch as much as $2 billion, two people with knowledge of the matter said.

The Boston-based private equity firm has hired JPMorgan JPM.N to run the sale and is expecting binding bids by mid-June, one of the people said.

Gong Cha makes more than $70 million in annual earnings before interest, tax, depreciation and amortisation, the person said.

A value of $2 billion would imply a multiple of nearly 30 times core earnings. Buyers are inclined to offer a lower multiple, the two sources said.

TA Associates did not respond to a request for comment. Gong Cha, Bain Capital, General Atlantic and JPMorgan declined to comment.

Founded in Taiwan in 2006, Gong Cha has grown to become one of the world's largest tea brands, with nearly 2,200 locations in 32 markets through direct and franchise stores.

It sells milk tea, fruit tea and other cold drinks through stores in Asia, North America, Europe and the Middle East, according to its website. Group revenue rose 14% to $217 million last year, driven by growth in Japan and South Korea.

Gong Cha also expanded into five new markets last year, including Thailand, Colombia and Ecuador, and completed strategic acquisitions of master franchisees on the east and west coasts of the United States.

TA Associates, which focuses on growth opportunities, invested in Gong Cha in 2019, its website shows.