PE firm KKR sells Masan shares

Masan Food Company. File Photo

Local media reported that MC Holdings and KKR Aggregator, two units under KKR's management, have sold almost 42.6 million shares, equivalent to a 10 per cent stake in Masan Consumer.

Steven R. Okun, KKR's director of Asia-Pacific Public Affairs, confirmed the sale with Viet Nam News but declined to provide further information.

The buyers were not disclosed, but sources have said KKR has received a 100 per cent return on its investment, even though it retains half of its stakes in the Vietnamese company. The private equity firm also received US$50 million in dividend payments from Masan Consumer last year.

The New York-based firm made its first investment in Masan Group in April 2011, spending $159 million to acquire a 10 per cent equity stake in the Vietnamese fish sauce maker. This made it the largest private equity deal in the country at that time.

Two years later, KKR invested an additional $200 million in Masan Consumer for another 10 per cent stake, lifting its total investment here to $359 million. This became its biggest investment in Southeast Asia.

The PE firm has bet on Viet Nam's young population and growing middle class, which it believes will help it generate returns, and Masan Consumer is the fastest growing fast-moving consumer goods (FMCG) company in Southeast Asia.

The typical holding period for a PE investment is three to five years. In developed markets, that is a good time to identify targets that are primed for growth and can generate the necessary value enhancement in time. In emerging markets, this time horizon may differ.

According to market insiders, this year is the proper time for KKR to consider the exit of its investment. The sale of its stake in Masan Consumer has brought KKR substantial profit.

Last month, Masan Consumer successfully sold all its bonds, worth VND9 trillion ($413 million), in the largest-ever private corporate deal in Viet Nam's capital market. Its five-year bonds were sold to eight banks to help its parent company Masan Group pay off debts, reduce costs and bolster its balance sheet.

This year, Masan Consumer hopes to earn VND15.5 to 17.5 trillion ($711 to 803 million) in total sales and VND3.6 to 4.3 trillion ($165 to 197 million) in net profit.