PETALING JAYA: Build up a grocery chain, make it a roaring success, sell it for a king’s ransom, then rinse and repeat. That’s exactly what the Teng family has done over the years. They have enjoyed great success using this model, and are now working on cashing in the chips on their latest supermarket chain – MyHero Hypermarket.
The operators of the HeroMarket grocery chain and Hero Save mart stores have approached several private equity (PE) firms with a view of selling the chain which has about 30 outlets nationwide, of which 27 are in the Klang Valley.
Navis and London-based Intermediate Capital Group (ICG) are among the PE firms recently approached by MyHero Hypermarket Sdn Bhd, angling to sell the chain for some US$100 million (RM445 million), according to sources who spoke with The Edge.
OCBC Advisers (M) Sdn Bhd was hired to be the financial adviser in negotiating a deal with potential purchasers and conducting the sale process.
Navis holds a stake in TFP Retail Sdn Bhd, which operates Village Grocer and Ben’s Independent Grocer (BIG) premium grocery stores.
On the other hand, ICG backs hypermarket operator TF Value-Mart, which focuses on second-tier cities.
MyHero was founded by Francis Teng and his son Austin, who own 80% and 13.6% of the company respectively. The remaining 6.4% is held by Francis’ wife, Aw Poo Eng.
The Teng family are no strangers to the business of grocery retail, having founded the first Giant store in Kelana Jaya, Selangor, in 1982.
They appear to be, once again, poised to make a killing from the sale of a hypermarket chain.
Another trophy for Teng family
In 1944, patriarch Teng Sek How opened his first sundry shop in Jalan Sentul, Kuala Lumpur. Years later, his sons Francis and Yew Huat would go on to build the Ace Hardware and Jaya Grocer chain of stores, respectively.
Francis owns 22% of Ace Hardware through Giant Ace Sdn Bhd, as well as a 97% stake in Megah Inovatif Sdn Bhd, that operates the RM2-store Noko.
In December 2021, the Jaya Grocer chain was sold to Grab Holdings Ltd in a whopping RM1.8 billion deal.
Yew Huat owned a 55% stake in Jaya Grocer, and bought back a 45% stake for RM411 million previously sold to AIGF Advisors Pte Ltd in 2016 just 17 days before Grab announced the purchase.
Some of the family’s earlier successes include Teng Minimarket Centre (TMC) and the Giant hypermarket chain, both of which were sold in 1999 to Hong Kong-based Dairy Farm International Holdings Ltd, now known as DFI Retail Group Holdings Ltd.
DFI Retail recently sold its grocery business operated by GCH Retail (M) Sdn Bhd to a special purpose vehicle, Macrovalue Sdn Bhd, led by Andrew Lim Tatt Keong, for an undisclosed sum.
Lim is the group executive chairman of Sogo as well as the current president of the Malaysia Retailers Association.
GCH Retail also operates the Mercato, Cold Storage and Giant Mini brands in Malaysia.
Growth of MyHero
MyHero has seen substantial growth over the last few years, from its first outlet in Bandar Sri Permaisuri, Kuala Lumpur, in 2005 to operating over 450,000 sq ft of retail space and 300,000 sq ft of distribution centre space.
The chain has a strong presence in the Klang Valley but also continues to expand to other locations.
For 2023, new openings have been identified in Puncak Bestari and Section 13, Shah Alam in Selangor; and in 2024 in KIP Mall, Sungai Petani, Kedah.
Data from the Companies Commission of Malaysia (SSM) and source information indicate the group posted a gross profit of RM146.3 million for the financial year ended June 30, 2022 and RM147 million the previous year (FY2021).
Revenue came in at RM840.4 million and RM844.3 million respectively.
Projections see the group’s revenue growing to RM946.4 million in FY2023, RM1.076 billion in FY2024 and RM1.229 billion in FY2025 on the back of a 11% compound annual growth rate (CAGR).
MIDF Research has noticed a growing trend in Malaysian hypermarkets selling private brand items such as Top Value from Aeon, Meadows by Giant Malaysia, and Lotus by Tesco, which provide the same quality products at a lower price.
“Hypermarkets that offer their private brand products could potentially differentiate themselves from competitors and gain market share in Malaysia,” it said.
It noted that hypermarkets which can provide customers more reasonably priced products while also providing an excellent shopping experience would be able to acquire a larger market share.
“This is regardless of whether they are a mid-range or value hypermarket,” it said.
This value, mid-range niche is exactly where MyHero is nicely positioned for growth, making it an attractive target for retail-focused private equity firms, and potentially giving the Teng family yet another golden bonanza.