Alibaba leads $400 million investment in Masan Group's consumer and retail unit

Alibaba will acquire 5.5 per cent of The CrownX, Masan Group's consumer and retail arm

Masan Group Corporation (HSX: MSN) and a consortium led by Alibaba Group (Alibaba) and Baring Private Equity Asia (BPEA) today announced the signing of definitive agreements for the acquisition of a 5.5 per cent stake in The CrownX (TCX) for a total cash consideration of $400 million. The CrownX is Masan’s integrated consumer retail arm that consolidates its interests in Masan Consumer Holdings (MCH) and VinCommerce (VCM).

The transaction implies a pre-money valuation of $6.9 billion for 100 per cent of its equity, an equivalent of $93.5 (VND2.15 million) per share. Masan will own 80.2 per cent of The CrownX post the consortium’s investment.

The formation of The CrownX last year brought together two industry leaders to form a consumer and retail powerhouse. As part of Alibaba’s investment, The CrownX will now partner with Lazada to build the Company’s digital presence and capabilities and accelerate the offline to online (O2O) market in Vietnam. With this partnership, the transaction marks a shared vision across the company’s shareholders that The CrownX has the potential to establish Vietnam’s first tech-enabled consumer ecosystem and expand its reach to serve consumers nationwide.

“This strategic partnership will accelerate our ability to achieve our goal of transforming The CrownX into a one-stop-shop to serve consumers’ everyday needs, whether offline or online, 'Point of Life'. Our immediate priority is to modernise Vietnam’s grocery market and develop an unparalleled consumer proposition from assortment to shopping experience,” said Danny Le, CEO of Masan Group. “I strongly believe that this partnership will reduce our learning curve and enable us to reach our endgame more efficiently and effectively.”

“We are delighted to be partnering with Masan and Alibaba, and believe this strategic investment has the potential to supercharge The CrownX’s growth in a nascent retail market and create the largest consumer ecosystem in Vietnam. As a long-term investor in the country, we think Vietnam has a long runway for growth supported by strong macroeconomic tailwinds and attractive demographics,” said Janice Leow, managing director at BPEA.

“The CrownX also has tremendous digital potential, particularly in e-commerce and data analytics. BPEA prioritises digital transformation in all of our portfolio companies, and we look forward to working with the Company in its next stage of growth.”

As a part of the transaction, VCM will enter a strategic cooperation agreement with Lazada, Alibaba’s Southeast Asia e-commerce platform. Accordingly, VCM will be the preferred grocery retailer of choice on Lazada’s e-commerce platform in Vietnam. The parties will co-share know-how and co-develop analytics to develop grocery as a key online category.

In addition, both sides will transform VCM’s offline stores into pick-up points for online orders as well as explore synergies between the respective parties’ logistics platforms for service and cost optimisation for consumers.

Grocery accounts for 50 per cent of Vietnam’s retail market and 25 per cent of consumer wallet share and essential daily use, but online penetration is still nascent. Masan has aspirations for The CrownX’s online Gross Merchandise Value to account for at least 5 per cent of its total sales value in the upcoming years.

Masan is also in advanced discussions regarding a further strategic investment of $300-400 million into The CrownX from other investors, expected to close in 2021.