SK Group, one of South Korea’s largest conglomerates, is said to be mulling an investment in Vietnam’s largest pharmacy retail chain Pharmacity, two sources privy to the matter told DealStreetAsia.
The funding value could be up to $90 million, said one of the persons mentioned above. DealStreetAsia could not ascertain if the round would be all equity or include debt financing.
“We reviewed the investment opportunities but none have been confirmed,” a representative from SK said in an email without divulging further details.
DealStreetAsia also understands that SK is adding smaller cheque sizes in its mandate to be able to invest in more Vietnamese businesses.
SK’s investments in Vietnam have been sizeable. The chaebol (Korean for ‘conglomerate’) has earlier put $1 billion in Vingroup, Vietnam’s biggest company on the stock market, and $470 million in diversified company Masan Group.
Through SK Investment Vina III, the Korean giant acquired a 24.9% stake in pharmaceutical firm Imexpharm for approximately $29 million in May 2020).
In 2018, SK Energy, another SK Group’s subsidiary, increased its shares in PetroVietnam Oil Corporation (PV Oil) to 54.1 million shares, equivalent to around 5% equity. That number of PV Oil shares is currently worth about $32 million. Local media reported that SK Energy had plans to spend hundreds of million US dollar to acquire a significant minority stake in PV Oil if the Vietnamese government was to divest more from the state-owned oil firm.
Pharmacity, founded in 2011 by Chris Blank, is backed by Vietnam-based private equity firm Mekong Capital. Early last year, Pharmacity announced raising an additional $31.8 million from undisclosed investors.
Mekong Capital did not comment for this article, while Chris Blank has not responded to DealStreetAsia’s query.
Pharmacity is currently the largest pharmacy retailer in Vietnam with more than 500 stores nationwide. The company expects to expand its network to 1,000 drugstores in the country by November 2021. The company’s latest financial operation in public records showed that its net loss in the first half of last year widened 59% y-o-y to over 194 billion dong ($8.4 million).
The runner-up in terms of store count looks to be Long Chau Pharmacy, a chain owned by Vietnam’s tech major FPT Corporation, with over 200 stores by the end of 2020.
Vietnam is poising steady growth opportunities for pharmacy businesses. Between 2010 and 2015, the average spending on pharmaceuticals increased at an average rate of 14.6% per year, and is expected to continue at a rate of 14% per annum until 2025, according to the Vietnam Pharmaceutical Industry Report 2020 by local research firm VietnamCredit.
Private equity deals in the Vietnamese healthcare sector have recently picked up. Since the start 2020, the country has seen investments into hospital and clinic chains such as Vinmec (by a GIC consortium), Thu Cuc Hospital (led by VinaCapital), Nhi Dong 315 (by BDA Capital Partners) and Kim Dental (by ABC World Asia and Aura Group).
Other assets that are up for sale that DealStreetAsia has reported include Gene Solutions, mask producer Wakamono and OPV Pharmaceutical, among others.