Southeast Asian business groups buying into Vietnamese firms
Southeast Asian business groups buying into Vietnamese firms
The merger and acquisitions (M&A) market in Vietnam is heating up thanks to the participation of big regional firms, who own majority stakes in local firms like Prime Group, Cai Lan, and Maybank Kim Eng Securities Co.
1. Thai SCG’s acquisition of Prime Group
Thailand’s Siam Cement Group (SCG) has announced it will spend some $7.2 billion baht (US$240 million) to buy an 85 percent stake in Prime Group, a Vietnamese tile manufacturer.
Prime Group (Prime) is a multi-sector company focused in the fields of real estate investment and building materials production. It currently has a capacity of 75 million m2 of tiles per year and holds a 20 percent market share of the domestic brick sector.
As SCG’s valuation of Prime is at some $240 million, much higher than the actual value of the company, Prime’s current shareholders did not hesitate to sell their shares to the foreign firm.
SCG considers Vietnam to be a strategic market and has been expanding its operations in Vietnam since 1992. It currently has 17 companies with more than 2,300 employees in Vietnam. With total assets of more than $370 million, its annual revenue from Vietnam stands at $300 million.
2. NawaPlastic raises holding in Binh Minh Plastics and Tien Phong Plastics
In mid-2012, NawaPlastic, an SCG-related business, announced that it had collected a large amount of shares in Binh Minh Plastics and Tien Phong Plastics.
The two local firms are leaders in the field of construction plastics, while Nawaplastic Industries (Saraburi) Co Ltd is a subsidiary of Thai Plastic and Chemicals Public Co Ltd (TPC).
Thai Plastic Co. has purchased 9.82 million shares of Tien Phong Plastics, coded NTP, and 5.85 million shares of Binh Minh Plastics, coded BMP. Thus, the current holding rates of NawaPlastic in Tien Phong Plastics and Binh Minh Plastics are 16.7 percent and 22.7 percent, respectively, making it a major shareholder in both firms.
3. Wilmar and Vietnamese cooking oil/animal feed market
Singaporean firm Wilmar has a 68 percent stake in Cai Lan Oils & Fats Industries Co (Calofic), which accounts for over 55 percent of the local market share of bottled cooking oil, with well-known edible oil products including Neptune, Simply, and Meizan.
In 2011, Calofic earned more than VND10.5 trillion in revenue and VND250 billion in after-tax profit, far ahead of runner-up Tuong An, which achieved revenue and after-tax profit of more than VND4.4 trillion and VND25 billion.
Wilmar has a local subsidiary, Wilmar Agro Vietnam, which is headquartered in the Mekong Delta city of Can Tho, and works in rice bran and protein-rich rice bran. Its main producted is the Vang rice bran brand, which is supplied to local animal feed and aquaculture feed manufacturers.
In 2011, Wilmar Agro Vietnam earned nearly VND1 trillion in revenue and VND42 billion in post-tax profit.
4. Ayala and the HCMC water supply acquisition plan
In 2008, Ayala penetrated the Vietnamese market with a $44 million water loss reduction project in HCMC.
In November 2011, the consortium of Manila Water, Mitsubishi and Refrigeration Electrical Engineering Corp (REE) recommended that the Saigon Water Supply Co (Sawaco) implement a similar project in other areas of the city.
In December 2011, Ayala purchased a 49 percent stake in Thu Duc Water BOO Corp from the Ho Chi Minh City Infrastructure Investment Joint Stock Co (CII) for $42.6 million.
In May 2012, Ayala acquired a 10 percent stake in CII and Manila Water. A subsidiary of Ayala is also a partner of CII and the HCMC State Financial Investment Co (HFIC) in HCMC’s existing water supply and distribution networks.
5. Jollibee holds dominant stakes in Highlands Coffee and Pho 24
Highlands Coffee Co, a Vietnamese coffee shop chain and producer and distributor of coffee products, sold 50 percent of its stake in Pho 24 to Philippines-based Jollibee for $25 million after acquiring 100 percent stake of Pho 24 in early 2012.
The transaction, carried out via Jollibee Worldwide - a Jollibee Group member, is said to be the beginning of the foreign company’s plan to acquire full stakes in Highlands Coffee and Pho 24 for Jollibee’s long-term plan in Vietnam.
Highlands Coffee was established in Hanoi by a Vietnamese-American in 1998. This was the first time an Overseas Vietnamese was able to register a private company within Vietnam.
6. Maybank enters local banking sector
In August 2012, Malaysia’s Maybank bought Kim Eng Holding Singapore, which owns 49% of Kim Eng Vietnam Securities Joint Stock Co (KEVS), later renamed Maybank Kim Eng Securities Corp.
Now, Maybank is wishing to raise the 49% stake (worth US$14.4 million) to 100% to become the first foreign securities firm in Vietnam.
Operational in Vietnam since 2008, Maybank Kim Eng is one of the few companies in Vietnam that enjoyed profits from securities brokerage services in its first year of operation. Currently, Maybank Kim Eng is the 4th largest broker in Vietnam.
In addition to stocks, Maybank currently has a capital contribution rate of up to 20 percent in An Binh Joint Stock Commercial Bank.
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