Centroid to divest control of TaylorMade as exit strategy, drops IPO plan

Centroid Investment Partners, a South Korean private equity firm, has confirmed plans to divest its controlling stake in US sports equipment manufacturing firm TaylorMade Golf Co., opting for an outright sale over an initial public offering.

The decision, announced on Wednesday, follows an internal review of exit scenarios conducted in partnership with financial advisers JPMorgan and Jefferies.

Centroid previously signaled it was weighing multiple choices to exit its investment, including an IPO, but has now settled on a direct sale, which it said would maximize quick returns for its investors.

"We conducted a thorough analysis of various monetization strategies and concluded that a stake sale provides a more favorable risk-return profile for our limited partners, compared to an IPO," said a Centroid official.

The Seoul-based PE firm said that the premium typically associated with management control transactions, along with the ability to expedite the process, were key considerations in the decision.

Centroid plans to formally initiate the sale process in the second half of this year.

OPPORTUNE TIME

The move comes as the global golf industry continues to experience buoyant M&A activity, a trend Centroid believes will enhance the likelihood of a successful transaction.

The PE firm cited growing certainty around exit timing and returns, in contrast to the potential for valuation discounts and heightened market volatility that could impact a listing.

Centroid acquired TaylorMade, one of the world’s top golf club brands, from New York-based KPS Capital Partners in 2021 for around $1.7 billion, making it one of the largest cross-border deals by a Korean private equity group.

Back in 2021, Centroid formed a project fund for the deal, with contributions from Korean fashion retailer F&F Co., MG Korean Federation of Community Credit Cooperatives, National Agricultural Cooperative Federation and National Credit Union Federation of Korea.

ROBUST GROWTH UNDER CENTROID OWNERSHIP

Founded in 2015, Centroid is headed by a former Macquarie investment banker Jeong Jinhyeok. It has focused on carve-out deals from large business groups, including fabric maker Kolon Advanced Fiber from textile conglomerate Kolon Group and Woongjin Booxen, a book distributor, from Woongjin Group it took over in 2019 and 2020, respectively.

TaylorMade has seen robust growth under Centroid’s ownership, with the golf equipment maker posting average annual growth rates of over 10% in net sales and over 15% in earnings before interest, tax, depreciation and amortization (EBITDA) over the past five years.

The golf equipment maker has also expanded into new categories, including the launch of Sunday Red, an apparel line developed in collaboration with golf legend Tiger Woods.

Analysts said the proposed stake sale is expected to attract strategic and financial investors keen to capitalize on TaylorMade’s global brand recognition and strong growth trajectory, particularly as the pandemic-era golf boom shows signs of structural durability.

Write to Jun-Ho Cha at chacha@hankyung.com

In-Soo Nam edited this article.