Teng family continues to run Jaya Grocer

The JV is believed to have used a PE fund known as the Asean Industrial Growth Fund (AIGF), which was set up five years ago with an initial fund size of US$130mil (RM527mil), to acquire the grocery chain. It is a South-East Asia-focused PE fund with investors mainly from Japan. Development Bank of Japan Inc is also reportedly a member of the partnership.

PETALING JAYA: The Teng family, best known as the founders of the Giant retail chain from which they divested in 1999, will continue to manage and majority-own the Jaya Grocer high-end supermarket retail chain.

Retail industry officials said that the Teng family will continue to hold 55% of Jaya Grocer, while a private equity fund, the Asean Industrial Growth Fund (AIGF), will own the remaining 45% stake.

AIGF is the fund manager of the one-year old fund, which is 45% owned by CIMB Private Equity, 45% by Mitsubishi while the Development Bank of Japan owns the remaining 10%.

The Teng family has confirmed AIGF’s entry as a substantial shareholder in Jaya Grocer.

In relation to the entry of AIGF, Teng Yew Huat, who is the Jaya Grocer founder and managing director, said that the entry of brands such as CIMB and Mitsubishi behind the retail chain bodes well for their plans.

“I look forward to working with my new strategic partners as we continue to grow the business,” said Teng.

The entry of a PE firm into Jaya Grocer confirmed a StarBiz report on May 11 of the entry of AIGF into the supermarket retail chain. “The reason why AIGF went into the deal is because they want to be part of growth business and have full confidence in the Teng family,” said an industry official.

The industry official said that the PE firm should be able to contribute in improving Jaya Grocer’s point of sales system.

“Their contribution would be to ensure there is better customer experience with improvements to the point of sales system,” said the industry official.

StarBiz also reported that the entry of the PE firm valued the supermarket retail chain at RM300mil. However the industry official said that the number was highly over the mark and their entry valued the supermarket chain at a “much lower” price.

The sale of a 45% in Jaya Grocer was through a competitive exercise. The closest competitors to AIGF are believed to be two other PE firms namely TPG Growth and Creador. The retail business has attracted the interest of PE firms.

Navis, for example, had invested in Village Grocer (a competitor of Jaya Grocer) and the Big Group (that runs Ben’s Independent Grocer) and is said to be in talks to buy the Oriental Group of restaurants, a Malaysian-Chinese fine-dining group.

Jaya Grocer, which is owned by Trendcell Sdn Bhd, posted an earnings before interest, tax, depreciation and amortisation (Ebitda) of RM18mil in financial year (FY) 2015.

StarBiz had reported that Trendcell reported a profit after tax of RM1.05mil on the back of a revenue of RM283.08mil for its FY 2014 ended June 30. This gives it a profit after tax margin of a mere 0.37%. The company has total assets of RM77.87mil. The Teng family is best known as the founders of Giant Hypermarket and TMC (Teng MiniMarket Centre) in Bangsar. The family sold the Giant chain to Hong Kong-based Dairy Farm group in 1999 for an undisclosed sum.