KKR to Take $250 Million Stake in Vietnam's Masan and UnitBy
KKR Invests $150 million for 7.5% Stake in Masan Nutri-Science
KKR investment to help cement six-year partnership with Masan
KKR will pay $150 million for a 7.5 percent stake in Masan Nutri-Science, Masan Group’s meat-producing business, the companies said in a statement. The New York private-equity firm will provide the support of its global network and team to Masan Nutri-Science as it accelerates its strategy to build the meat business in Vietnam, it said. KKR will also buy $100 million of Masan Group’s shares from PENM Partners.
The investment values Masan Nutri-Science at $2 billion, further cementing KKR’s relationship with the Masan Group after investing $359 million in Vietnam’s biggest maker of fish sauce and its consumer unit over the past six years.
“We have witnessed them develop a seasonings company into a $2 billion diversified consumer group and look forward to again backing Masan as they execute their growth plans,” Ming Lu, head of KKR’s Asia private equity business, said in the statement.
Vietnam’s meat sector offers opportunity because it’s fragmented, with the leading producer holding less than 1 percent of the market share, according to the statement. Vietnam’s market for meat, which totaled 3.1 million tons in volume in 2016, is the third-largest in Asia, behind only China and India, according to data from Euromonitor.
Shares of Masan Group rose as much as 2.2 percent on Monday in Ho Chi Minh City trading. Masan Group’s shares have risen 11 percent this year, compared with the 8.9 percent increase in Vietnam’s benchmark stock index.
Vietnam’s emerged as a destination for foreign investors in recent years due to its young demographics and growing consumer sector.
“Vietnam is attractive not just because of its given growth potential, but because it is effectively less expensive than its regional peers in Southeast Asia,” said Andy Ho, chief investment officer at VinaCapital Group. “Many multinational companies have lower cost-to capital than Vietnamese companies so it is easier for them to buy Vietnamese companies than to build from scratch.”
With food and financial services taking up half of the spending of Vietnam’s 90 million consumers, Masan Group Chairman Nguyen Dang Quang said he wants to cater to more customers by having them pay less on its products.
“With KKR’s investment in Masan, we will be in a stronger position to deliver on our commitment to Vietnamese consumers,” he said in the statement.
Danny Le, head of business development at Masan Group and chief executive officer of Masan Nutri-Science, will become vice chairman of the unit. Pham Trung Lam, head of sales at Masan Consumer, is being appointed Masan Nutri-Science chief executive officer, according to the statement.
Masan Group established Masan Nutri-Science in 2015 after acquiring two feed companies, Lam said in an interview.
Masan Nutri-Science expanded beyond the feed sector last year after investing 1 trillion dong in a 230,000-head pig farm and acquiring nearly one-fourth of the state-owned Vietnam Meat Industries, the country’s largest meat supplier known as Vissan, he said. The subsidiary’s sales grew by nearly one-fifth to 24 trillion dong last year, representing more than half of Masan Group’s total revenue, Lam said.
Masan Nutri-Science aims to represent half of Vietnam’s animal feed market and 5 percent of the country’s meat market by 2020, Lam said. The Masan unit forecasts annual revenue to increase nearly four-fold to $4 billion with net profit of $650 million by 2020. One-fourth of revenue is expected to derive from meat sales, Lam said.
— With assistance by Sterling Wong