Singapore's GIC eyes potential M&A deal in Vietnam's retail sector

Bach Hoa Xanh is Vietnam's third-largest grocery chain

GIC is among the bidders looking to acquire a stake in Bach Hoa Xanh in a transaction that could increase the grocery chain's valuation to $1.5-1.7 billion. Other bidders include companies from Thailand. The deal is slated to be wrapped up in the first quarter of 2024 if the negotiations are successful, as reported by Reuters.

"The deal is nearing the finalising stage and is expected to close soon," a source with knowledge of the matter said.

Mobile World said, "Information will be announced once the deal is concluded. The company is still in a private placement and has signed an agreement not to disclose information with interested bidders."

Established in 2015, Bach Hoa Xanh, backed by Vietnam's retail giant Mobile World Investment, runs more than 1,700 stores in Vietnam's southern and south-central provinces.

Mobile World has now decided to proceed with the planned sale after putting it on hold earlier this year due to unfavourable market conditions, the sources said. The company had first planned the sale of up to 20 per cent of Bach Hoa Xanh last year.

This potential deal is expected to heat up the mergers and acquisitions (M&A) in Vietnam's retail market in 2024. Indeed, retail is one of the hot sectors for M&A deals in the nation, with many worth billions of dollars.

To tap into the market of 100 million people, domestic and foreign retailers are stepping up their dealmaking activities. Notable transactions have included Thai investors Central Group and Berli Jucker acquiring the Big C and Metro supermarkets, as well as Vietnamese groups Thaco and Saigon Co.op taking over the Emart and Auchan supermarkets.

Another big deal involved Vingroup selling its retail subsidiary VinCommerce, which operated VinMart and VinMart+, to Masan Group.

In April 2021, South Korea's SK Group paid $410 million for a 16.26 per cent stake in VinCommerce (currently renamed WinCommerce). SK also spent $340 million to scoop up a 4.9 per cent stake in Crown X, a consumer retail platform from Masan Group.

In the same year, Alibaba Group and Baring Private Equity Asia acquired a 5.5 per cent stake in The CrownX for $400 million.

Looking ahead, the retail landscape seems promising. The current market valuation stands at $142 billion, with projections estimating a surge to $350 billion in the near future. Given that the retail sector has been a favourite for investment, Vietnam is expected to see more vibrant retail M&As, especially from foreign retailers looking to expand further within the local market.

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