Yoma to snap up YKKO for $12.6m

Conglomerate Yoma Strategic will acquire a 65 percent-stake in Myanmar restaurant chain YKKO in a deal worth US$12.6 million.

YKKO – formally known as Yankin Kyay Oh Group of Companies – was founded in 1988. It has humble beginnings as a small, family-run restaurant in Yangon’s Yankin but now boasts 37 outlets in the three major cities as well as Bago and Mawlamyine.

The net tangible asset value of YKKO was $4.09 million (K6.22 billion) as at September 30, 2018.

The restaurant chain would further expand its footprint in Myanmar in partnership with Yoma, chair Daw Yu Yu Lwin commented.

Yoma chief executive Melvyn Pun said YKKO is a household name and that the acquisition doubles his company’s F&B store count.

The $12.6 million purchase will be funded by Yoma’s resources and financing activities, the Singapore-listed conglomerate said in a statement on Monday. It raised US$70 million from Thai institutional investors last month via a bond offering, the first of its kind for a Myanmar company.

Mr Pun also said the Myanmar restaurant complements the foreign brands imported in Yoma’s food and beverage portfolio, which currently includes KFC, Little Sheep, and Auntie Anne’s. The company aims to have six international and local brands across 125 outlets by the financial year 2023-24.

Jeremy Mullins, managing director of FMR Research, described YKKO as “a strong name” which “has done well in Myanmar”. “This success looks poised to continue with the investment announcement by Yoma.”

There has been a tendency over the last decade for companies to focus on bringing international franchises into the Myanmar market. Notable examples include Gloria Jeans, Krispy Kreme, Pizza Hut, Burger King and Lotteria.

In contrast, there has been less movement in merger and acquisition for domestic brands. The last high-profile investment dated back to September 2016, when investment and advisory group Anthem Asia announced to finance Yangon-based restaurant Rangoon Tea House. The size or the structure of the investment was not disclosed.

“It’s a nice change to have locally-grown F&B companies invested in and built up for the future instead,” Mr Mullins said.

The executive said he hoped other Myanmar restaurants will be able to expand abroad in the future. Building up strong local restaurants specialising in Myanmar food will be a key part in raising the popularity of Myanmar cuisine.

Myanmar-based Feel International Group last month opened its first overseas outlet, in Bangkok, becoming the first domestic restaurant chain to venture abroad.

“Running restaurants in any market is very challenging. Myanmar has its own unique difficulties as well. Land prices are not as high as they once were, but are still relatively expensive on a regional basis,” he said. Logistics and human resources represent other challenges for the industry.


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