Global growth private equity firm TA Associates has completed its previously announced strategic growth investment in premium tea provider Gong cha. Financial terms of the transaction have not been disclosed.
Founded in 2006 in Kaohsiung in southern Taiwan, Gong cha is one of the most recognised Taiwanese tea brands in the world. Gong cha, which translates to “tribute tea for the emperor,” provides quality tea, products and services, sourcing ingredients from selected suppliers and offering customers freshly brewed tea. The Company’s leading product is its famous Taiwanese-style bubble tea, which is sweet milk tea infused with pearl-shaped tapioca. Utilising primarily a franchise model, Gong cha reaches consumers through a variety of retail store formats, including urban and suburban stores, as well as take-out shops, mall-based stores and kiosks, often in high traffic areas such as train and metro stations. There are more than 1,100 Gong cha stores in 17 countries, including Taiwan, Korea, Japan, the Philippines, Vietnam, Malaysia, Singapore, Mexico, Australia, Canada, the United Kingdom and the United States.
Partners Group, the global private markets investment manager, has, on behalf of its clients, provided debt and equity to Gong cha to support the transaction through its Private Debt business. In addition, as part of the transaction, Gong cha management and the founders of Gong cha Korea and Japan made substantial investments in the Company alongside TA and Partners Group.
“We are very pleased to invest in Gong cha, a high-growth business that is among the world’s most recognised Taiwanese tea brands,” says Edward Sippel, a Managing Director at TA Associates and Co-head of Asia operations of TA Associates Asia Pacific Ltd. “We are extremely impressed with how successfully the management team has grown Gong cha into the profitable, global business it is today. We will work closely with management in supporting the Company’s franchise partners and look forward to helping grow the Gong cha brand in new and existing markets.”
Gong cha has a track record of successful growth, having grown revenue and EBITDA from 2016 to 2019 at a 43 per cent and 70 per cent CAGR, respectively.
“The global tea market has enjoyed steady growth over the past several years, and tea remains a staple beverage across Asia and increasingly around the world,” says Michael Berk, a Managing Director at TA Associates. “Globally, the tea market is estimated to be larger than that of coffee, with continued expected growth. Given these market dynamics, we believe that Gong cha is well-positioned to further expand its presence and brand throughout the world.”
