Viral ice cream sensation Little Moons is the focus of a fiercely competitive auction as a group of private equity firms fight to agree a deal that would value the brand at upwards of £100m, The Grocer has learned.
Investment bank Houlihan Lokey is running the process for the business, with a deal expected to close within the next four weeks.
At least five PE houses are involved in the second round of the auction: Bridgepoint, Investcorp, L Catterton, Perwyn and True.
City sources said the most likely outcome was a sale of a significant minority stake, with Little Moons founders Howard and Vivien Wong retaining a majority holding.
Growth has exploded at the business in the past year thanks to a viral TikTok video, with annualised revenues now running at about £50m.
Any deal is expected to hit a sales multiple of 2x or 3x, giving the brand a valuation of at least £100m.
“It is a red-hot process, with all the firms involved running pretty hard at it,” a dealmaker in the City said.
“Little Moons has first-mover advantage in the UK, good branding, and it has really caught the zeitgeist.
“The business has grown phenomenally and done a great job of transitioning a social media-driven boom into something sustainable.”
Howard Wong told The Grocer: “Little Moons is the European leader in mochi ice cream, a product category that’s experiencing exponential growth. We’re always looking for ways to accelerate our expansion and are flattered by the interest in our company.
“While we’re exploring options to capitalise on the opportunity in front of us, at this stage there’s nothing to announce.”
A TikTok video in early 2021 of a Tesco customer buying Little Moons has generated more than 300 million views and inspired other users sharing similar videos using the hashtag #LittleMoons.
It led to a 700% sales surge in Tesco for the mochi ice cream balls and new listings with Sainsbury’s, Morrisons and Asda supplementing distribution already in place with Waitrose and Ocado.
“The business is now in that enviable phase of being a ‘must stock’ for all the supermarkets,” a second City source said. “And having three or more SKUs in every mult gets you to a big revenue number very quickly.”
Little Moons added an extra £17.6m in value sales in 2021, from a base of just under £2m to almost £20m, registering growth of 900%, according to The Grocer’s annual Top Product Survey [NielsenIQ 52 w/e 11 September 2021].
That figure is now understood to be much higher.
“Little Moons is also really profitable as well as high growth, which is extremely rare,” another City source added. “It ticks all the boxes: branded, premium, fast growing and profitable.”
The brand’s mochi balls are available in 20 countries across Europe, the Middle East and in Singapore, but it has yet to make headway in North America, where rival My Mochi is a market leader, with distribution in more than 20,000 retailers throughout the US and Canada.
Houlihan advised My Mochi on its own sale to Lakeview Capital in January 2020.
“There is clearly a big international play to come for Little Moons,” the City source said. “My Mochi is about three years ahead, but it gives an idea of what Little Moons can achieve.”
Little Moons employs about 300 staff and offers 12 flavours, as well as newer cookie dough ice cream bites.
In 2020, Little Moons invested £3.5m in a new production facility in London, a move it said would allow it to make around 72 million mochi balls each year, up from 18 million previously.
“The social media boost was a year ago and it is still going strong,” a dealmaker added.
“It has a great rate of repeat sale in a snacking category where people are choosing to trade up to a premium alternative to Magnum or Ben & Jerry’s.
“Frozen snacking has become a real trend and Little Moons is leading that.”
At the time of writing, The Grocer had not heard back from Bridgepoint, Investcorp, L Catterton, Perwyn or True.
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