TH Group expects IPO in Singapore within next two years

The first phase of TH Group's milk processing complex in Russia broke ground in 2016 and was inaugurated one year later

TH Group is planning to be listed on the stock exchange in the next two years. Group founder and chairwoman Thai Huong said that the IPO will be conducted in Singapore. Since late last year, TH Group has consulted several financial institutions to prepare its plans for the initial public offering (IPO) of its dairy business.

TH Group set the revenue target of $1 billion from the dairy business before listing. The proceeds of the IPO will be used to develop their domestic market and expand business in Russia.

On the note of listing on overseas stock exchanges, one year ago, Vietjet announced intentions to become the first Vietnamese company to list its shares on a foreign stock exchange. Currently, the carrier controls more than 40 per cent of the domestic air transport market and seeks more funds after spending billions of dollars to purchase aircraft.

A number of overseas stock exchanges, including London, Hong Kong, Singapore, and New York expressed interest in the stock of Vietjet. This company is still weighing its options and has yet to make a final decision.

Not only carrier giant Vietjet, technology company VNG Corporation is also conducting the IPO process and expects to list its shares on Nasdaq. On May 29, 2017, VNG’s general director and Nasdaq’s vice chairman signed a memorandum of understanding to hold the IPO of VNG’s shares on this stock exchange, enabling VNG to approach US funds.

According to the plan, VNG would take between 18-24 months to complete the procedures for listing and conducting its IPO.

In reality, Vietnamese firms are facing difficulties in listing overseas due to the strict listing criteria set by foreign stock exchanges. Major corporations Vinamilk, Hoang Anh Gia Lai, and Saigon Securities Corporation have all put forward plans along these lines over the past ten years, but none of them have managed to succeed due to restrictions in foreign ownership (which have since been lifted), differences in accounting standards, and the global financial crisis.

After nine years of operations, TH Group established three subsidiaries, namely TH Milk Food, TH Milk, and TH Food, operating the biggest cattle farm in Asia and the largest dairy production facility in Southeast Asia with the total investment capital of $1.2 billion in the central province of Nghe An. The group also intends to develop farms in other provinces, such as Ha Giang, Phu Yen, and Soc Trang, to reach the total scale of 137,000 milk cows by 2020.

Up to late 2016, these three companies made hundreds of millions of dollars in accumulated losses, despite a revenue growth of 20 per cent between 2014 and 2017.

TH Group’s Thai Huong said that the group has enough capital to develop its dairy business in the country and does not have to seek financial resources at the moment.

In addition to shareholders’ capital, the group received loans from BIDV, Vietnam Development Bank (VDB), Maritime Bank, and Bac A Bank, where Thai Huong is CEO.

In Russia, TH Group is investing into a dairy cow and high-tech milk processing complex worth $2.7 billion. The project would be completed within ten years and would be divided into three phases in order to house 350,000 milk cows and a number of dairy factories with the total capacity of 1.8 million tonnes per year and the total area of 140,000ha.

Several days ago, TH Group has signed a co-operation agreement with Russian Direct Investment Fund (RDIF) which will invest $633 million into the former’s dairy projects in Russia. Other potential markets for TH Group include China, Singapore, Malaysia, and Indonesia.

As TH Group is pouring immense amounts of capital into improving production, business, and developing overseas markets, the listing on an overseas stock exchange is a good decision to approach overseas funds.