Two domestic giants, property major Vingroup and diversified Masan Group, have emerged as the most acquisitive and deal-happy firms in Vietnam in 2015, cornering nearly one third of the total M&As in the region.
Vietnam, an economy that is attracting a lot of interest in South East Asia, clocked a modest 30 inbound and outbound disclosed equity deals in 2015, dominated by its own largest private companies who straddle a vast spread of sectors from realty to consumer goods to financial services and resource sectors.
Between the two, they grabbed almost a dozen deals driven by strategic motives of gaining consolidation, regional market leadership and diversification play. Vingroup, which is a property developer, used the M&A strategy to emerge as a formidable front-end retail player.
On the other hand, Masan Group used the inorganic growth strategy to gain regional leadership positions in animal feed and beverage businesses even though its other verticals remained silent on the deal front.
DEALSTREETASIA puts the lens on the deal activity of these two prolific firms during 2015.
Vingroup’s M&A strategy driven by retail consolidation
Vingroup, in which Warburg Pincus has so far pumped in $300 million, went on an acquisition overdrive to consolidate its position in retail play with a string of six acquisitions.
During the year, US-based investment firm Warburg Pincus made a follow-on investment of $100 million specifically into the retail unit, Vincom Retail, emphasising on the focus area of the group.
While the value of its 2015 transactions remained undisclosed, the group spent close to VND10 trillion on M&As in 2014.
So, Vingroup picked up two smaller rivals in retail. In April, it acquired Vinatexmart, the retail arm of the Vietnam National Textile and Garment Group (Vinatex). Vingroup also purchased 10 per cent of Vinatex during its initial public offer last year.
In its most recent deal, it bought out Maximark, focused on the lower central and southern regions of Vietnam.
While previous acquisitions revved up its network of supermarkets and convenient stores in northern Vietnam, the Maximark deal enabled Vingroup to develop its nationwide chain, helping realise its goal of having 100 outlets across the country by 2020.
The transactions echoed what Vingroup had done in 2014, spending VND560 billion for 70 per cent stake in Ocean Retail.
“The Vietnamese retail industry is an attractive and highly potential market, even for the long term. Besides domestic players, a number of the world’s major retailers have also made substantial investments in Vietnam,” Duong Thi Mai Hoa, Vingroup chief executive, said in a statement.
In its core business of real estate, Vingroup acquired over 89.4 per cent in the Vietnam Exhibition and Fair Centre JSC, or Giang Vo Exhibition Centre, in March, turning the state-owned company into its subsidiary, and automatically grabbing the chance to become the future investor of a mega project for the national exhibition and fair centre.
Following on this deal, the group announced takeovers of two local minor real estate players, Ho Chi Minh City-based Anh Sao Real Estate JSC and Hop Nhat Group JSC. However, Vingroup exited Anh Sao Real Estate just four months after sealing the deal.
Most recently, Vingroup completed the purchase of 61.17 per cent stake of Me Tri Sport and Entertainment Development JSC, the owner of a 32-hectare mixed-use development.
Masan Group strikes big deals in animal feed, beverage biz
The Masan Group closed 2015 with a big-bang $1.1-billion cross-border deal with Thailand’s beer maker Singha Corp. In a major acquisition in the southeast Asian region, the Thai beer maker said, it will purchase 25 per cent stake in Vietnamese consumer goods firm Masan Consumer Holdings, part of diversified Masan Group, and 33.3 per cent of its subsidiary Masan Brewery.
“The partnership between Masan and Singha is unique as it is rare for two leading ASEAN platforms to team up. Masan has always believed that a successful strategic partnership will lead to transformational value creation. To me, this means 1 + 1 = 5,” commented Nguyen Dang Quang, Masan Group chairman.
While the diversified group Masan Group made a strategic divestment at the fag end of the year, the maker of popular foods such as instant noodles and sauces made a string of acquisitions through the year. It made its 2015 deal debut with the purchase of over 32 per cent stake in seasoning product manufacturer Cholimex, to hold 32.84 per cent of the food firm.
This deal was followed by the buyout of Saigon Nutri Food, a producer of sausage and canned food, before Masan Group announced to acquire 52 per cent in Vietnam French Cattle Feed JSC (Proconco) and 70 per cent in Agro Nutrition Company (Anco), in April. The two businesses were subsidiaries of Sam Kim Co Ltd.
The deals propelled the food giant to emerge as second largest animal feed platform to take on Thai player CP Group.
Rumour has it that Masan Group also assumed control of GreenFeed JSC, which is backed by Malaysian investments, hinting that the game has changed in the local $8-billion animal feed market.
In a private equity-related move, Masan Group confirmed with DEALSTREETASIA in July that the US investment firm Kohlberg Kravis Roberts & Co LP (KKR) had sold half of its holding in the Masan Consumer unit and made 100 per cent return.
In 2011, KKR paid $159 million for a 10 per cent stake in the consumer goods arm of Masan. It was the largest private equity investment in Vietnam at that time and also KKR’s first transaction in Vietnam. The US company then more than doubled its investment to $359 million in 2013.
Masan Group’s other businesses are Masan Beverage, Masan Nutri-Science, Masan Resources (energy) and strategic holding at Techcombank (finance).