|Pet Friends' promotional image / Courtesy of Pet Friends|
Pet product e-commerce logs exponential growth rate over the past few years
By Anna J. Park
IMM Private Equity (IMM PE) and GS Retail jointly acquired Pet Friends, the top local online pet product retailer, aiming to boost its value.
According to the investment banking industry, IMM PE, GS Retail and Pet Friends signed a share purchase agreement (SPA), finalizing the acquisition of a 95 percent stake in the online pet product retail platform. IMM PE bought 65 percent of the shares, while GS Retail acquired 30 percent, investing around 150 billion won ($130 million) for the deal. Around 103 billion won of that will be paid for the takeover of the firm's old shares, while 50 billion won will be put into issuing new stocks, as they plan to complete the payment for the deal by next month.
With the SPA agreement, IMM PE will be positioned to control part of the equities held previously by Pet Friends CEO Kim Chang-won, as well as part of shares held by some venture capital firms. GS Retail's previous stake before the SPA was 15.6 percent. GS Retail invested 5 billion won back in Pre-Series A, Series A and Series B rounds from 2017 to 2019. CEO Kim will continue holding onto the remaining 5 percent of shares.
As the country's pet product market continues to grow, Pet Friends ― the top player in the market ― has been seeing exponential growth in recent years. Established in 2016, the firm's annual revenue in 2018 stood at around 3 billion won. Yet it grew by more than 13 times within two years, reporting an annual revenue of 40 billion won in 2020. Last year's total annual revenue is likely to be reached again this year in just the first six months of the year. This year's annual revenue is expected to reach at least 60 billion won and likely higher.
With IMM's value boosting plan, the private equity firm will increase its investment particularly in Pet Friends' logistics, delivery, marketing and diversification of pet products, after thoroughly studying customers' needs. New types of business expansion, such as development of healthy pet foods under its own brands, are also planned. GS Retail distributional channels are also expected to create a synergy effect, strengthening Pet Friends' presence beyond the internet.
IMM PE is said to have much interest in acquiring local e-commerce platforms after successfully exiting from W Concept, as the PEF sold the women's clothing e-commerce business to Shinsegae earlier this year, earning more than a 30 percent return after three years. IMM's investment in Pet Friends came about as the PEF sees chances for further growth in the local pet product market in the years ahead.