Southeast Asian business groups buying into Vietnamese firms

3

The merger and acquisitions (M&A) market in Việt Nam 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 Việt Nam to be a strategic market and has been expanding its operations in Việt Nam since 1992.

It currently has 17 companies with more than 2,300 employees in Việt Nam.

With total assets of more than $370 million, its annual revenue from Việt Namstands at $300 million.

2. Nawa Plastic raises holding in Bình Minh Plastics and Tiền Phong Plastics

In mid-2012, NawaPlastic, an SCG-related business, announced that it had collected a large amount of shares in Bình Minh Plastics and Tiền 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 Tiền Phong Plastics, coded NTP, and 5.85 million shares of Bình Minh Plastics, coded BMP.

Thus, the current holding rates of NawaPlastic in Tiền Phong Plastics and Bình 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 Cái Lân 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 Tường An, which achieved revenue and after-tax profit of more than VND4.4 trillion and VND25 billion.

Wilmar has a local subsidiary, Wilmar Agro Việt Nam, which is headquartered in the Mekong Delta city of Cần Thơ, and works in rice bran and protein-rich rice bran.

Its main producted is the Vàng rice bran brand, which is supplied to local animal feed and aquaculture feed manufacturers.

In 2011, Wilmar Agro Việt Nam earned nearly VND1 trillion in revenue and VND42 billion in post-tax profit.

4. Ayala and the Hồ Chí Minh City (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 Sài Gòn Water Supply Co (Sawaco) implement a similar project in other areas of the city.

In December 2011, Ayala purchased a 49 percent stake in Thủ Đức Water BOO Corp from the HCMC 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 Phở 24

Highlands Coffee Co, a Vietnamese coffee shop chain and producer and distributor of coffee products, sold 50 percent of its stake in Phở 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 Việt Nam.

Highlands Coffee was established in Hà Nội by a Vietnamese-American in 1998.

This was the first time an Overseas Vietnamese was able to register a private company within Việt Nam.

6. Maybank enters local banking sector

In August 2012, Malaysia’s Maybank bought Kim Eng Holding Singapore, which owns 49% of Kim Eng Việt Nam 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 Việt Nam.

Operational inViệt Nam since 2008, Maybank Kim Eng is one of the few companies in Việt Nam that enjoyed profits from securities brokerage services in its first year of operation.

Currently, Maybank Kim Eng is the 4th largest broker in Việt Nam.

In addition to stocks, Maybank currently has a capital contribution rate of up to 20 percent in An Bình Joint Stock Commercial Bank.

Source: tuoitrenews.vn

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