Hortaleza company gets new investor, buys drugstore firm

The Hortalezas’ personal care store chain HBC Inc. has beefed up its retailing business with a deal to acquire pharmaceutical retailer Savemore Drug Inc. using additional financial muscle from an international private equity fund.

The Aureos South-East Asia Fund (ASEAF) has acquired a 35-percent stake in HBC for about $7 million, according to Danny Lizares, investment principal in Aureos’ Philippine office.

Part of the money pumped in by Aureos into the company was used to buy the 53-store SaveMore Drug, Lizares said.

SaveMore Drug, which is based in Marilao, Bulacan, was founded and owned by the Gatmaytan family.

ASEAF is managed by Aureos Capital Ltd., a private equity fund management company specializing in investing in small- and medium-sized businesses in emerging markets.

Lizares added that Aureos was expecting HBC to go public in three to four years.

About a fifth to a quarter of the $200-million ASEAF would likely be invested in the Philippines, Lizares said.

The deal valued HBC at around $20 million or P840 million.

HBC is led by Rosalinda Ang-Hortaleza, wife of Splash Corp. chairman Rolando Hortaleza. Based on HBC’s latest regulatory filing at the Securities and Exchange Commission, the company has P1.94 billion worth of assets in its balance sheet, of which P942 million consisted of current assets such as cash, trade and other receivables, inventories and advances to related parties.

In 2010, HBC booked P42.3 million in net profit from P1.4 billion in revenues. The net profit grew from P34.9 million in 2009 on the back of P1.2 billion in revenues.

For Aureos, the buy-in deal into HBC expands its presence in the consumer healthcare business. The private equity firm has a 20-year experience in providing growth capital and expertise to enterprises with growth potential.

Aureos typically generates deals with businesses that stand out—usually family-owned, with at least five to seven years of history, often a niche market leader and always with a good track record. The goal upon exit is not only to sustain growth but also to achieve a high valuation and minimal residual liability.

Last January, ASEAF completed a $4-million investment in the Daniel O. Mercado Medical Center. The fund acquired 33 percent of the business, previously wholly owned by the Mercado Group.

Aureos has also invested $4 million to acquire 21 percent of publicly listed restaurant operator Pancake House in 2005, which was used to acquire a second brand—Teriyaki Boy. Lizares talked to reporters during the signing of Pancake House’s acquisition of homegrown premium pizza company Yellow Cab last week.