KKR Buys Masan Stake in Biggest Vietnam Private Equity Deal
Kohlberg Kravis Roberts & Co. Co-Chairman and Co-CEO
Peter Foley/Bloomberg
Kohlberg Kravis Roberts & Co. Co-Chairman and Co-CEO.
Kohlberg Kravis Roberts & Co. Co-Chairman and Co-CEO. Photographer: Peter Foley/Bloomberg
KKR & Co. agreed to pay $159 million for a stake in Vietnamese fish sauce maker Masan Consumer Corp. in the largest private-equity investment in the Southeast Asian nation.
KKR, based in New York, will buy 10 percent of Masan Consumer, the companies said in a joint statement today. It is KKR’s first investment in Vietnam and its fourth in Southeast Asia, according to the release. Masan Consumer is a unit of Masan Group Corp. (MSN)
KKR, founded by Henry Kravis, is betting Vietnam’s young population and growing middle class will help it generate returns even after inflation soared to a 25-month high and the country’s currency dropped to a record low against the dollar. TPG Inc. and BankInvest, a Danish investment fund, bought a $50 million stake in Masan Group in October 2009.
“Most foreign investors are looking beyond the near term and thinking about where this country is going to be in five years if the macro policy gets back on track and inflation comes down,” said Adrian Cundy, Ho Chi Minh City-based head of research at VinaSecurities Joint-Stock Co. “Vietnam’s young demographic is where investors see major growth and that’s the attraction.”
Cundy said the agreement marks the biggest private equity deal in Vietnam.
Currency Plummets
Masan Group shares were unchanged at 83,000 dong at the 11 a.m. local time close. The stock has gained 11 percent so far this year, compared with a 4.9 percent decline in the VN Index, the benchmark measure of the Ho Chi Minh City Stock Exchange.
The deal comes as Vietnam struggles to tame inflation that almost reached 14 percent in March and tries to stabilize the local currency after devaluing it for the fourth time in 15 months in February. The Vietnamese dong dropped to a record low against the dollar as of 10:43 a.m., according to data from banks compiled by Bloomberg.
Private equity investors are looking to invest in industries like consumer goods, cosmetics and food, where companies can pass on price increases, said Cundy.
“Vietnam is a large country with a young and growing population where there has been considerable economic progress, structural reforms, and a notable increase in living standards,” said Ming Lu, a senior operating executive at KKR, in an e-mail. “Demographic and social trends favor the rise of domestic consumption.”
Tripling Profit
Vietnam aims to expand its economy 7 percent to 8 percent per year over the next decade and wants to triple per capita income to $3,000 in that time, the former leader of the ruling Communist Party, Nong Duc Manh, said in January.
Masan Consumer, formerly known as Masan Food, is the market leader in fish, soya and chili sauce and the second largest producer of branded instant noodles in Vietnam, according to today’s statement. Its profit tripled to 1.25 trillion dong ($60 million) in 2010 from 402 billion dong in 2008.
Goldman Sachs Group Inc. advised Masan Group on the deal.
Mount Kellett Capital Management LP, a U.S. private equity group, said in January it spent $100 million for a 20 percent stake in Masan Resources, another unit of Masan Group that owns a tungsten mine in the country.
“Domestic companies are much more open to accepting partnerships than they previously did,” said Cundy of VinaSecurities. “Their valuation expectations are much more realistic than they were two years ago, given the macro issues. That will make it more attractive.”
--Diep Ngoc Pham in Hanoi. With assistance from K. Oanh Ha and Giang Nguyen. Editors: Philip Lagerkranser, Chitra Somayaji
To contact the Bloomberg News staff on this story: Diep Ngoc Pham in Hanoi at dpham5@bloomberg.net
To contact the editor responsible for this story: K. Oanh Ha in Hanoi at oha3@bloomberg.net
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