Goldman Takes Stake in South Korean Bakery Ingredients Maker

By Timothy W. Martin Features Dow Jones Newswires

Goldman Sachs Group Inc. sees a sweet spot in Korean baked goods.

Continue Reading Below

The New York investment bank's private-equity arm in Asia is investing 34 billion Korean won ($30 million) for a minority stake in Sun-in Co., a South Korean food company that makes and distributes ingredients to a proliferating number of homespun bakeries, cafes and confectioneries across the country.

Goldman's investment will help fund additional facilities and customer service technology for Sun-in, a firm founded in 1987 that is based in the Seoul suburb of Yongin. The privately held company makes or sells more than 1,000 products, including things like purple sweet potato filling and its own brand of whipping cream.

Sales of baked goods have been rising in South Korea, thanks to a shift in local tastes. Consumption of butter and cheese has risen 26% and 31% respectively on a national level in recent years, according to government data, while annual rice consumption fell to an all-time low of 61.9 kilograms a person in 2016, less than half the peak figure in 1970.

From 2009 to 2014, the number of cafes and bakeries grew 81% to more than 72,000 locations, according to a government report from last year. Large South Korean bakery chains, with names like Paris Baguette and Tous Les Jours, have become so popular that they have expanded to the U.S. -- and even to Paris.

Stephanie Hui, Goldman's co-head of private equity in Asia, said in a statement that Sun-in has significant growth potential "given the continuing diversification of diets and palates in Korea."

Continue Reading Below

Goldman has invested more than $4 billion in South Korea since 1999. In 2014, the bank backed South Korea's leading food-delivery app, Baedal Minjok, also known as Delivery Nation. Last year, it teamed up with a Korean private-equity firm to acquire a majority stake in Happycall Co., a maker of cookware and kitchen appliances.

Many investors remain bullish on South Korea despite its continuing political tensions with North Korea. The stock market's benchmark Kospi index is up about 20% this year, making it one of the best performing in the world.

Merger and acquisition activity in South Korea is also up significantly. Around $72 billion worth of deals have been announced in the year to date, compared with $50.2 billion in the same period last year, according to Dealogic data.

Write to Timothy W. Martin at timothy.martin@wsj.com

(END) Dow Jones Newswires

October 10, 2017 20:14 ET (00:14 GMT)