updated - August 13, 2020 Thursday EDT
The Flynn Restaurant Group L.P., the world's biggest franchisee gets a $300 million investment budget from the pension fund of Canadian Teachers. The group is the operator of the famous food chains Taco Bell and Applebee's. This budget raises the organization's worth up to more than $1 billion.
Due to the investment done by the Ontario Teachers' Pension Plan, also known as OTPP, will gain a 50 percent stake in the franchise. Together with this agreement is the Flynn Restaurant Group head, top official Greg Flynn and other top officials of the franchise. This strategy moved their owner to a higher notch in their company in San Francisco.
The officers and OTPP, was able to lure the interests of two big corporations to give up their investment through the Teachers' Private Capital group. The two organizations are Weston Presidio and Goldman Sachs Group Inc.
The FRG or Flynn Restaurant Group, is currently the pilot local franchisee to be worth more than a billion, according to Flynn's statement. The company is as well the first to be free from the traditional private equity ownership.
As Flynn quoted, "we are at a better place in terms of growth aspect compared to other franchisors."
Not like the private equity, the OTTP agreement gives "evergreen capital" without having to deal with issues on performance and funding which are normal struggles in a tradition private equity deal, based on Flynn's assessment.
"Most franchise owners are not used to be in a private equity set up due to the issues that I have emphasized in my earlier statement," he commented.
Normally, pension funds are invested in private equity funds. However, in this scenario, the OTPP does not want to go through a third party and chose to do a direct investment. Flynn shared this in his interview.
When 2013 ended, OTPP gained their net assets amounting to $!40.8 billion. And as what was reported by the Wall Street Journal, this was the money they will invest on the restaurant.
With the huge sum of money for investment, partners have been impressed and pursued the agreement.
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