FINANCE

Centroid eyes TaylorMade Golf IPO after $1.9b buyout deal

By Son Ji-hyoung
  • Published : Aug 3, 2021 - 17:53
  • Updated : Aug 3, 2021 - 17:53

A promotional image of TaylorMade Golf's driver and its golf ball teed up (TaylorMade Golf)
An investor consortium led by the Seoul-based equity firm Centroid Investment Partners has closed a $1.87 billion deal to buy a 100 percent stake in TaylorMade Golf from US private equity firm KPS Capital Partners, Centroid said Tuesday.

The buyout deal will lay the groundwork for the US-based golf equipment and clothing maker to go public in the future, the Korean investor said.

When TaylorMade does go public, the investor consortium will have enough room to seek a “considerable amount of capital gain” as they look to price the offered shares when comparing with US-listed peers, Centroid said in a statement.

According to Centroid’s company analysis, TaylorMade’s enterprise valuation is set lower than the two listed golf product rivals Acushnet Holdings and Callaway Golf, considering the three firms’ profit-generating capacity.

The market cap of Acushnet, which owns the Titleist brand, came to $3.9 billion as of Monday, while its adjusted earnings before interest, taxes, depreciation and amortization -- which gauges a company’s overall financial performance -- is projected to be $288 million for 2021.

Callaway Golf’s market cap stands at $6 billion, while its adjusted EBITDA for this year is estimated to be $217 million.

TaylorMade’s gap between the figures is smaller than its peers trading on the New York Stock Exchange as of current, according to the Korean investor, as Centroid had set TaylorMade’s enterprise value at $1.7 billion and its 2021 adjusted EBITDA projection to $200 million.

Centroid did not specify the timing of TaylorMade’s initial public offering.

The announcement of the finalized deal comes months after Centroid signed a definitive agreement to acquire TaylorMade.

The seller KPS Capital Partners exited from TaylorMade after its enterprise value soared by 4.4 times since its $425 million acquisition in 2017.

The transaction comprises $532 million in equity, $405 million in redeemable preference shares for risk hedging, as well as $933 million financed for senior and subordinated debts combined.

Centroid has worked with numerous partners in Korea, including outfit manufacturer F&F, Korea Federation of Community Credit Cooperative, National Credit Union Federation of Korea and Yuanta Securities Korea.

Of them, F&F is a strategic partner that has injected 500 billion won ($434.4 million) in Centroid, according to a filing submitted to domestic financial authorities. F&F holds the contractual right to be given priorities when the TaylorMade Golf shareholder is engaged in a new business transaction, according to Centroid.

Since its founding in 2015, Centroid has been dedicated to small- to mid-cap buyouts including Kolon Advanced Fiber and Woongjin Booxen. It also has a history of buying South Springs Country Club, an 18-hole golf course in Gyeonggi Province.

Through the company’s first overseas buyout, Centroid will raise its assets under management to nearly 1.5 trillion won.


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