Prudential buys into Kinh Do

Movers and shakers: Tran Kim Thanh of Kinh Do (left) and Prudential’s Huynh Thanh Phong unveil the partnership

Under the deal signed last week, Prudential Vietnam will buy 1.5 million Kinh Do shares, nearly one-third of the five million new shares the confectionery maker plans to issue to raise funds for new projects. Neither party would reveal the sale price of the shares.
Huynh Thanh Phong, general director of Prudential Vietnam, said his firm had taken more than two years to get to know Kinh Do before agreeing to invest.
Prudential Vietnam hired the well-known international auditing firm PricewaterhouseCoopers to assess its partner’s business and financial operations, he said.
“We highly appreciate Kinh Do’s performance and great potential and will team up with it to raise the corporation to a new stage of development,” he said.
“This investment in Kinh Do is part of Prudential Vietnam’s commitment to diversify its investment portfolio in order to bring in more profits for its policyholders.”
Prudential Vietnam is the second-largest institutional investor to have bought Kinh Do shares behind the London Stock Exchange-listed Vietnam Opportunities Fund (VOF), which holds a 10 per cent stake in Kinh Do.
Prudential Vietnam is fast-tracking a plan to launch an investment fund to absorb its increasing premiums and cash in on opportunities in the local financial market.
“We will hold a press conference on June 10 to announce details of the fund,” Phong told Vietnam Investment Review last week.
The premium fund, managed by Prudential Fund Management Company, will have an initial capital size of VND5 trillion ($318.4 million), which will be funded by premiums collected by Prudential Vietnam through to the end of last year. Part of this money has already been invested in a wide range of sources, including government bonds, listed shares, unlisted shares, property projects, deposits and other short-term investments.
Kinh Do president Tran Kim Thanh said he was pleased that Prudential Vietnam had become a strategic shareholder in the firm.
“The partnership will help Kinh Do strengthen its financial capacity, enhance corporate management, bolster its trademark, expand into regional and global markets, and increase profits,” he said.
Investors like Prudential Vietnam will enable Kinh Do raise further funds to build a planned 13-hectare factory, with an estimated investment capital of $6.4 million, in the Vietnam-Singapore Industrial Park (VSIP) in Binh Duong province, among other real estate projects, he said.
VIR has learned that, apart from Prudential Vietnam, Vietnam Securities Investment Fund (VF1) is considering buying a 3 per cent stake – 750,000 shares – in Kinh Do. If VF1’s purchase is successful, the three largest institutional investors will hold a combined 17.5 per cent stake in Kinh Do.
With annual revenues of around $60 million and an annual growth rate in excess of 20 per cent, Kinh Do is one of the largest and most successful branded food firms in Vietnam.
The company currently has nearly 200 distributors and 40,000 retail outlets throughout the country, together with over 25 bakeries in Ho Chi Minh City and Hanoi.
Retail Asia magazine selected Kinh Do among the top 500 retailers in the Asia-Pacific region in 2004.
The company has revealed plans to float shares on the local stock exchange in the fourth quarter of this year. After that, it will merge with the bourse-listed North Kinh Do, which now has VND50 billion ($3.18 million) in chartered capital, with Kinh Do holding almost half of the shares.