ThaiBev approaches Vietnam to buy stake in Brewer Sabeco

Nov 15th at 14:01

15-11-2014 14:01:14+07:00

Thai Beverage PCL., owned by Thailand’s third-richest man, has approached the Vietnamese government to buy a stake in the country’s largest brewer, an indication that foreign interest remains strong in the frontier market despite a series of botched privatizations.

ThaiBev, which owns the Chang Beer and Oishi green tea brands in Thailand, is looking to buy a stake in state-owned Saigon Beer Alcohol Beverage Corp., or Sabeco, which is valued at about $2 billion, people with knowledge of the deal said. ThaiBev is owned by Thai tycoon Charoen Sirivadhanabhakdi, who according to Forbes has a net worth of $11.3 billion at the end of June.

Separately, a Vietnamese government official who didn’t want to be identified said Sabeco, which is under the Ministry of Industry and Trade, will set up a panel to restructure the company and sell up to 53% of it to one or several strategic investors. The government currently owns 89% of the brewer, which sells brands including 333 and Saigon Beer and controls 46% of Vietnam’s beer market as of 2013, according to Euromonitor.

ThaiBev’s interest in Sabeco follows the failure to capture a Myanmar brewer by another of Mr. Charoen’s companies, Fraser & Neave Ltd. , which lost a legal battle early this month against a conglomerate controlled by Myanmar’s military seeking to wrest full control of the country’s biggest brewer. The acquisition of a stake in Sabeco would open up an alternative emerging market to Mr. Charoen, who has been on an aggressive shopping spree in the past few years in the property and consumer sectors. ThaiBev declined to comment

In 2011, Mr. Charoen acquired Fraser & Neave for $11 billion, while earlier this year Frasers Centerpoint Ltd.—a Singaporean property firm he controls—made a $2.4 billion offer to buy Australand, an Australian residential developer and office landlord. According to Euromonitor, beer sales in Vietnam grew 11% in 2013 and are expected to grow 9.6% next year. According to Sabeco, the brewer sold 649.8 million liters of beer in the first six months of this year, up 4% from a year earlier. Its revenue in the Jan-June period rose 6% on an annual basis to 14.3 trillion Vietnamese Dong ($680 million).

This isn’t the first time that Sabeco has been for sale. In the past, the Vietnamese government had planned to sell its stake in the brewer to strategic investors but got delayed due to various procedural issues such as the number of shares the government was willing to sell. But recently, the government has moved to quicken its reforms of state-owned enterprises, public investment and the banking system which are burdened with high levels of nonperforming loans.

Vietnam’s stock market is among Asia’s best performers this year so far, up more than 19.5% as investors buy into the small but fast-growing market. Government plans to privatize hundreds of state-owned enterprises in a bid to make them profitable have helped drive foreign investment. In recent weeks, however, the mood has become more gloomy as highly-anticipated offerings are made at valuations that local investors say are unreasonable. For instance, state-owned Vietnam Airlines which was aiming to raise $71 million in an initial public offering has been able to raise only $52 million with no participation from foreign investors. The government sold a 3.5% stake in the airline when 5% was planned initially. The airline chief executive in August said that the firm is speaking to potential strategic investors to sell a separate 20% stake in the company.

“Privatizing a state-owned company like Vietnam Airlines shows the government’s right direction in restructuring state-owned enterprises to enhance their transparency and efficiency,” Deputy Minister of Transport Nguyen Hong Truong said after the Friday IPO.

the wall street journal