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China’s private sector
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How full equity buyouts could help China’s cooling bubble tea sector turn a new leaf

Bain Capital’s acquisition of Gong Cha may signal a shift in bubble tea investment strategy, as sector slows after years of rapid expansion

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Gong Cha operates almost 2,200 stores in 33 markets worldwide. Photo: Nora Tam
Zhu Wenqianin Beijing
Fuelled by the recent bubble tea boom and an intensely competitive market, financial investors have shown growing interest in the sector’s major brands, shifting their playbook from early-stage bets and initial public offering subscriptions to full equity buyouts.

Growth of mid to high single digits was now expected for the industry in China, down from the double-digit growth projected in previous years, analysts said.

The slowdown followed years of capital being raised and deployed to chase the same growth story, said Sandy Lim, director of S&P Global Ratings.

In the latest development, global private investment firm Bain Capital said on August 6 that it had reached a deal to buy Taiwan-founded bubble tea brand Gong Cha Global from US private equity firm TA Associates and other shareholders.

Bain Capital would work closely with Gong Cha’s management team and focus on its store expansion in Japan, South Korea and the United States, it said in a statement.

Gong Cha operates almost 2,200 stores in 33 markets worldwide. Well-established across the Asia-Pacific region – particularly Japan, South Korea and Australia – the brand is also expanding in the Americas and Europe.

It currently had no stores in mainland China but operated outlets in Hong Kong and Macau, according to the firm.
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