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VinaCapital said it will continue seeking opportunities to invest in consumer goods companies, especially food and drink manufacturers.
The sale of Cau Tre Food to CJ Group last year brought US$12.4 million to the investment fund with the IRR (internal return rate) of 17% and the ROIC (return of invested capital) of 2.8x.
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Foreign investors struggled to obtain Vissan’s stakes, which shows the hotness of the Vietnamese food market.
When Vissan announced the IPO plan in March 2016, the number of stakes that investors registered to buy was 5.6 times higher than the amount of stakes offered. The IPO price was 4.7 times higher than the starting price level.
Two subsidiaries of Masan Group – Anco and Proconco – and CJ CheilJedang, a subsidiary of CJ Group from the Republic of Korea, all then struggled to become Vissan’s strategic shareholder.
Finally, Anco won the competition thanks to the higher price offered. It had to pay VND2.13 trillion to acquire 24.9% of Vissan’s stakes, believing that Vietnam’s meat market, worth US$18 billion, had a lot of potential.
Analysts all commented that the Vietnamese food market has stable growth rate of 10-15% per annum.
A report by Business Monitor International (BMI) showed that in 2011-2016, the consumption level was US$29.5 billion. Meanwhile, a domestic market analysis firm said the value of the market increased from US$18.8 billion in 2011 to US$32.1 billion in 2015, and the consumption level per capita was VND5.8 million in 2016.
However, this does mean that all investments were attractive.
An analyst commented that in most M&A deals, the buyers only target the leading companies in the industry which hold a large market share in their field and make products similar to the buyers’ products.
In some cases, buyers are attracted by the large distribution networks and large export markets owned by sellers. In the case of Cau Tre JSC, the exports always bring more than 60% of its revenue.
A report by StoxPlus on processed food showed that buyers in most of the M&A deals in 2015-2016 came from Asian countries, including Japan, Thailand and the Republic of Korea.
The processed food market can be classified into four market segments – meat processing, seafood processing, milk and fruit processing. While Japanese were the buyers of dairy companies, the Republic of Koreans favor the other three fields.
Hai Viet Corp. had export turnover of US$77 million in 2016. Thien Huong Food and Antesco, which processes vegetables and fruits, also is attractive in foreign eyes.
