Privately-held Masan Group today announced that PENM Partners, a private equity fund with one of the most successful track records of investing in growth companies in Vietnam, will acquire up to 2 per cent of the secondary shares in Masan Group in the open market.
|Masan Group's production facility
Separately, PENM will invest $16 million to acquire secondary shares representing a 0.8-per-cent equity stake in Masan Nutri-Science Corporation (MNS) from Masan Group, valuing MNS at $2 billion.
“We strongly believe in Masan’s long-term consumer growth fundamentals and strategy. In particular, we are excited about its prospects to consolidate a fragmented and unbranded meat sector by providing Vietnamese consumers safe, traceable, and affordable meat products,” said Hans Christian Jacobsen, managing partner of PENM.
“Ten years ago, we invested in Masan due to our belief that they were on the verge of transforming and consolidating the fish sauce market. We see a similar story starting to play out, but in a $9-billion meat category which is 30 times larger than the fish sauce market. In addition, I am confident that the operational investments across its platform in 2017 will be validated by Masan’s 2018 financial performance,” Jacobsen added.
Masan Nutri-Science is on track to launch its branded fresh meat product by the fourth quarter of 2018 with the commissioning of its farm and meat complex.
Danny Le, head of Strategy and Development at Masan Group and vice chairman of Masan Nutri-Science, stated, “PENM has been a partner to Masan at each growth stage. I look forward to working alongside PENM to deliver on and execute our 2020 growth action plan as we focus on building out a champion portfolio of packaged F&B, meat, and financial services products.”
PENM will also sell its non-voting preference shares in Masan Resources to Masan Horizon, a wholly-owned subsidiary of Masan Group, for a total cash consideration of $22.9 million, approximately equivalent to PENM’s investment.
Masan Group’s ownership in Masan Resources (including the non-voting preference shares) will increase from 93.8 to 96 per cent post acquisition.
The acquisition is consistent with Masan Group’s strategy to gain full flexibility and raise strategic growth capital for Masan Resources to become an industrial tungsten processer.
Masan Resources is expected to generate strong cash flows over the next few years due to an uptrend in tungsten prices, pay-down of long-term debt, and development into a global player in the tungsten value-added processing industry.
In December, Masan Group has also repaid its $30 million convertible loan originally lent by Goldman Sachs, effectively reducing its fully-diluted share count by an additional 13.6 million shares on an as-if-converted basis. This follows the company’s recent buyback of 100.7 million treasury shares.
The transactions detailed above are subject to customary corporate and regulatory approvals.
Masan Group’s member companies and associates are industry leaders in meat, packaged food and beverage, and financial services products, altogether representing segments of the Vietnamese economy that are experiencing the most transformational growth.