Riverside Buys Korean Pre-School Company

Target: Wiz Korea

Price: Under $150 million

Sponsor: The Riverside Company

Seller: James Jaehwan Lee, founder

Financial Adviser: Sponsor: MVP Partners

Legal Adviser: Sponsor: Jay Kim, Managing Director, Jonathan Shin, analyst

The Riverside Company has landed its first deal in South Korea, buying Wiz Korea, a chain of franchised pre-schools, for less than $150 million.

James Jaehwan Lee founded the five-year-old company, and built it to 60 franchises located mainly in Korea but also in Vietnam, China, and the United States. The concept caters to children ages two to seven. Its curriculum is centered around play-based learning whose aim is to strengthen toddlers’s emotions and intelligence. Students receive training in Chinese and English, art, music, mathematics, physical education, yoga, cooking and science.

The company has a strong reputation for providing quality educational materials and curriculum and it generates solid recurring revenue, Stewart Kohl, Riverside’s co-CEO, told Buyouts Magazine. Riverside plans to expand the company by finding quality franchisees in the metropolitan areas of South Korea who would want to open these schools. Stuart Baxter, the managing partner leading Riverside’s expansion in Asia, and Jay Kim, who is based in Seoul, led the deal team for Riverside.

Equity for the deal came from Riverside Asia Fund I, which is targeting $100 million. MVP Partners, a South Korean advisory firm, brought the deal to Riverside. The firm obtained senior lending from Korea Exchange Bank.

The deal marks Riverside’s second platform investment in Asia. In January the firm bought Shinsouki, a Niigata City, Japan-based parking lot operator. In April 2007 Riverside opened its first office in Asia, in Tokyo, and in October, it opened an office in Seoul, as previously reported in Buyouts Magazine.

Kohl estimates that the firm will make about 10 platform deals with the Asia fund, the majority of which will be in Japan. Riverside also plans to look at deals in Singapore, Malaysia, and potentially Australia. In some markets in Asia, private equity firms are associated with vulture firms that target distressed companies. “We want to get the word out that we’re buying quality, growing, profitable companies,” Kohl said. “There’s no distressed aspect to what we do.”

As for Korea, the country offers an abundance of small, private companies in consumer goods, traditional manufacturing, franchising, and education and training. Its growing middle class—and its respect and demand for quality education—is another attractive attribute of the country, Kohl said.

Wiz Korea marks the 20th acquisition for Riverside in 2008.