Zus Coffee brews global plans amid IPO buzz

If this were 2017, would you have bet on a Malaysian coffee chain as the next big thing? If the setting was Kuala Lumpur, you’d probably be having this conversation in a Starbucks in the city’s downtown area.

You’d probably regale your audience with the story of how the US chain turned around its fortunes after the 2008 global financial crisis by personalizing cups and turning its outlets into social hubs complete with WiFi. You’d probably also say that the coffee industry has hit the ceiling.

In contrast, a Malaysian coffee shop could easily be dismissed as either another Starbucks, some artisanal cafe or the shop where I can easily get a kopi o ais on the cheap, or the famed “white coffee” that proliferates in the northern city of Ipoh.

But today, the market is talking about Kuala Lumpur-based Zus Coffee, perhaps one of Malaysia’s hottest exports and primed for a listing.

During the recently concluded Tech in Asia Conference in Kuala Lumpur, Zus COO Venon Tian said that the firm would be opening its maiden store in Singapore this month and expanding to Pakistan by the first half of 2025.

The choice to expand to Pakistan was brought about by the country’s positive views on Malaysia’s halal products, making it easier to introduce Zus there, Tian tells Tech in Asia on the sidelines of the conference.

Currently, Zus has 500 branches in Malaysia and 30 in the Philippines. The latter happened after Filipino billionaire Frank Lao took up a 30% stake in the company. The coffee chain is in pole position in terms of store outlets in Malaysia, beating out Starbucks.

Due to its outsized presence in Malaysia, Zus had been tipped to be a potential company primed for an IPO.

Ready for the public market

A Zus IPO would make it the first Malaysian coffee chain to list on the Bursa Malaysia.

But Tian declined to confirm a report by The Edge that said the company was raising a pre-IPO round.

Citing sources, the report said that Singapore-based private equity KV Asia Capital is leading the fundraise, with Zus believed to be eyeing a valuation between 1 billion ringgit (US$224 million) and 1.5 billion ringgit (US$336 million).

KV Asia has some Malaysian exits such as hypermarket chain TF Value-Mart and private education group Asia Pacific Education Holdings.

Investors who were invited to the round tell Tech in Asia that it would be a syndicated investment – a round that involves multiple investors – with KV Asia as its lead and possible participation from Malaysian government-owned institutional investors. They didn’t specify which investors would join the round.

One too many brews?

Wither competitive advantage