Creador buys 30% stake in Tealive
On 11 June 2021 Creador, a Private Equity fund announced that it has invested in a 30% stake in Loob Holding which owns the Malaysian bubble tea brand tealive. Bryan Loo started Tealive in 2017. How did he get into the bubble tea business?
Bryan Loo and his father secured the Chatime master franchise for Malaysia in 2010 from Taiwan’s La Kaffa International. Chatime was a phenomenal success as the bubble tea boom had started here. Bryan Loo won awards for his marketing prowess.
In January 2017 La Kaffa suddenly terminated the Chatime franchise agreement citing breaches of terms. The master franchise had 24 more years to run. At that time Chatime Malaysia had 165 outlets and they accounted for more than 50% of La Kaffa’s total global turnover of the bubble tea business.
On 30 August 2018 the dispute ended when owners of Tealive and Chatime announced that they have reached an out of court settlement. Bryan Loo transformed most of the former Chatime outlets into Tealive.
La Kaffa went on to appoint the Will Group headed by Aliza Ali and Widayu A. Latiff as the new master franchisee for Chatime Malaysia.
The Bubble tea phenomenon
Allied Market Research published a report on the global bubble tea market (2020-2027) which said that Bubble tea consumption will grow to US$4.3 billion within the next 5 years.
Bubble tea or Boba tea originated from Taiwan. It is a combination of milk, tea and bubbles made of tapioca or fruit jelly which is served in various concoctions. In Malaysia, Celcom reported that there are more than 100 bubble tea franchises and 4000 outlets across the nation. It is a very fragmented market. Tealive has 600 outlets and is a leading player.
Who is Brahmal Vasudevan?
Who is the man behind Creador who has such faith in Bryan Loo and Tealive to invest more than RM200 million in the bubble tea brand?
Creador Sdn Bhd is a Malaysian based PE fund founded by Brahmal Vasudevan in 2011. Brahmal holds an MBA from the Harvard Business School and graduated with First Class Honors in Aeronautical Engineering from Imperial College, London. Brahmal started his career at BAT and also worked at the Boston Consulting Group. He also spent time at ASTRO before joining ChrysCapital, a PE firm focused on capital investments in India. After 11 years at ChrysCapital and rising to become the Managing Director and General Partner. Then he left to start Creador.
His investment in MR DIY made a lot of money for him and his investors when MR DIY was listed on Bursa Malaysia in 2020. It was the largest IPO in 2020 on the Malaysian stock exchange with a market capitalisation of RM10 billion. The offer price was RM1.60 a share and since then it has risen to more than double the listing price.
But MR DIY is not the only gem discovered by Brahmal’s team. The other is CTOS Digital Bhd.
CTOS is Malaysia’s leading Credit Reporting Agency (CRA). Its business is making credit information available for a fee to lenders about companies and individuals. In the recent IPO exercise, Creador sold 36% of its 80% stake in CTOS for about RM792mil cash. Its remaining stake is still worth over RM1 billion.
Some people have bantered about Brahmal being the man with the Midas touch.
BUT is TEALIVE Sustainable?
Coming back to Creador’s investment in Tealive bubble tea brand. Though the sum paid to Bryan Loo was officially undisclosed, Malaysia’s top financial publication, The Edge, said that sources put the amount at a range of RM200-RM260 million. That is a huge sum of money for a minority stake in a Malaysian bubble tea company.
What if Bubble tea is no longer the drink du jour in Malaysia or people prefer other brands instead of Tealive with the growing influx of Taiwanese bubble tea brands?
There are raised eyebrows over this investment. But Brahmal knows his gut feel about investments more than ordinary folks. We shall wait and see how this investment turns out. Meanwhile there is a very happy Bryan Loo around town.
- Creador. 11 June 2021. Justin Niessner. Creador takes 30% stake in Malaysia tea brand Tealive. www.creador.com
- The Edge Markets. Joyce Goh. 10 June 2021. Breaking News. Tealive’s parent sells 30% stake to PE Creador. https://www.theedgemarkets.com/article/tealives-parent-sells-30-stake-pe-firm-creador
- Talking about Food Franchises in Malaysia. Emily Tan Mei Shan. Taiwan’s Bubble Tea finds its home in Malaysia. Pp 23-26. August 2016. Published by Sparrow Publishing House. Kuala Lumpur.
- The Star. 21 January 2017. Chatime franchise termination may affect 1,000 workers. https://www.thestar.com.my/business/business-news/2017/01/22/chatime-franchise-termination-may-affect-1000-workers/
- Rahana Zurina & Partners. Tealive vs Chatime : Settled out of court. https://www.zurinalaw.com/news/tealive-vs-chatime-settled-by-way-of-mutual-agreement/
- Chatime. News. https://chatime.com.my/chatime-plans-return-to-malaysia-with-new-partner-will-group/
- The Asean Post. 27 December 2019. Southeast Asia’s bubble tea craze. https://theaseanpost.com/article/southeast-asias-bubble-tea-craze#:~:text=According%20to%20Grab's%20data%2C%20bubble,of%203%2C000%20percent%20in%202018.&text=Grab's%20data%20also%20found%20that,tea%20per%20person%20per%20month.
- CNN Travel. 30 April 2020. Maggie Hiufu Wong. The rise of bubble tea, one of Taiwan's most beloved beverages. https://edition.cnn.com/travel/article/taiwan-bubble-tea-origins/index.html
- Allied Market Research. Bubble Tea Market. April 2020. https://www.alliedmarketresearch.com/bubble-tea-market
- The Star. 18 August 2018. Tee Lin Say. Creador commits RM1bil in Malaysia. https://www.thestar.com.my/business/business-news/2018/08/18/creador-commits-rm1bil-in-malaysia
- CTOS. Who we are and what we do. https://ctoscredit.com.my/about-ctos/
- The Star. 3 December 2014. Wong Wei shen. https://www.thestar.com.my/business/business-news/2014/12/03/creador-poised-to-reap-rewards-from-ctos-buy/
- Creador. 16 July 2021. Tim Burroughs. Creador hits $500m first close on Fund V. https://creador.com/creador-hits-500m-first-close-on-fund-v/
- The Star. 24 July 2021. Ng Zhu Hann. CTOS – the Pride and Legacy of Creador. https://www.thestar.com.my/business/business-news/2021/07/24/ctos-the-pride-and-legacy-of-creador