In its latest announcement, VOF said it may also invest a moderate amount of additional capital during the next twelve months as the company delivers on mutually agreed milestones.
“This private equity investment is consistent with our strategy of focusing on companies operating in the sectors of the economy benefitting from strong domestic growth,” said Andy Ho, Managing Director of VOF.
Vietnamese food and beverage companies, in particular, have tremendous growth opportunities ahead of them as consumers spend more on high-quality, healthy products. Ho stressed that Ba Huan is well-positioned to capitalize on these trends.
Established in 2001, Ba Huan accounts for 30 per cent of Vietnam’s pasteurized egg market share and is said to be a household brand. The company has made significant investments in its operations, importing modern production lines from Europe and adhering to international standards. In 2018, it expects revenue to surpass $90 million.
Ba Huan’s General Director, Pham Thi Huan, holds 63.96 per cent of the company’s shares. Hawke Investment Fund (allegedly related to VinaCapital) holds a 16.39 per cent stake in the company. The rest is held by other individuals.
The deal saw VinaCapital value Ba Huan at nearly $200 million, double the market value of its rival Dabaco Vietnam JSC, which is believed to account for more than 5 per cent of Vietnam’s egg market share.
Founded in 2003, VinaCapital is a leading investment and asset management firm headquartered in Vietnam, with a diversified portfolio of $1.8 billion in assets under management.
Ba Huan JSC operates two fully enclosed industrial poultry farms, including a layer farm with over 1.5 million chickens for commercial egg production, and a broiler farm with over 400,000 chickens for meat production.
Each day, Ba Huan supplies over 1.7 million eggs, delivers over 15,000 chickens, and processes over 25 tonnes of fresh poultry meat. Its products are distributed to over 2,000 agents and points of sales throughout Vietnam.
Egg consumption is on the rise in Vietnam, with both chicken and duck eggs popular, according to Poultry World. Chicken consumption is also increasing, growing at a compound annual growth rate of 8.6 per cent, according to DBS Bank, and local producers have struggled to meet demand.
VOF recently invested approximately $45 million into two subsidiaries of PetroVietnam — PV Power and Binh Son Refining and Petrochemical (BSR) — as part of their initial public offering (IPOs) conducted in January.
“We participated in PV Power and BSR because we feel that the upside potential is very strong and these assets are poised to deliver an IRR north of 25 per cent over a three to five year period and maybe even longer,” Ho told DEALSTREETASIA in an interaction.