SK Group to spend $340 million to increase stake in Masan's retail arm

SK will increase its stake in The CrownX, Masan's retail arm

Masan Group Corporation (HSX: MSN) and SK Group today announced the signing of definitive agreements to buy secondary shares of The CrownX (TCX) for $345 million in cash, with $340 million coming from SK Group. After the acquisition is completed, Masan will control 85 per cent of The CrownX and SK will own 4.9 per cent, with Masan potentially raising its position in TCX in the near future.

After successfully turning around WinCommerce (WCM) which delivered its first profitable quarter in the third quarter of 2021, Masan will shift its priority towards scaling up TCX’s mini-mall POL concept – a combination of WinMart+ (grocery), Phuc Long Kiosk (coffee and tea), pharmacy, Techcombank, and Mobicast JSC, a startup mobile virtual network operator (MVNO) transaction point into an integrated loyalty offering.

The initial pilot of the mini-mall has already yielded results as demonstrated by higher foot traffic and profitability. Management is setting a medium-term game plan to re-expand the network nationwide while maintaining profitability with the following key performance indicators.

Specifically, Masan will drive private label portfolio to comprise 20-25 per cent of modern retail sales. The group will grow online grocery to comprise more than 5 per cent of total revenue or 50,000 orders per day. It will partner with 2,000-3,000 of Masan Consumer Holdings’ GT retailers for Wincommerce franchising model; and develop a loyalty programme and payments system via mobile wallets to drive consumer lifetime value and maintain a lean cost of consumer acquisition model.

Danny Le, CEO of Masan Group said, “SK’s investment is a validation that our 'mini-mall' concept, a winning nationwide model that will bring more value to consumers’ daily lives. The next quantum leap for our platform is driving our loyalty platform and digitalising our offering from products to services to win consumers mindshare whether off or online.”

Woncheol Park, representative director of SK Southeast Asia Investment said, “We stand fully behind Masan Group. We believe its growth strategy to rollout the 'mini-mall' concept and to build a consumer platform will reap a tremendous outcome for everyone involved.”

The transaction is subject to customary corporate approvals and Masan aims to close out its capital raising round of $200-300 million for TCX by the end of the year. Credit Suisse (Singapore) Limited acted as the financial advisor to Masan Group.