KKR inks largest-ever PE deal in Vietnam

The deal values Masan Consumer Corporation, formerly Masan Food, and a subsidiary of domestic private-sector powerhouse Masan Group, at $1.6 billion. The capital injection brings the amount Masan Consumer has raised through private equity to $500 million, garnered over the past two years.

As part of the agreement with KKR, Masan Group will dilute its holding in the company from 86.6% to 78%, issuing 14 million ordinary shares to KKR.

Masan Consumer is touted as Vietnam's leading fish, soya and chili sauce producer, and the second-largest maker of branded instant noodles. Its year-end revenue in 2010 reached $272 million, up from $96 million in 2008, and the company further reported a rise in net profit to $60 million, up from $19 million the same period. With KKR's backing, Masan Consumer looks to expand its FMCG offerings.

The deal marks KKR's first investment in Vietnam, and fourth in Southeast Asia, after Avago Technologies, MMI Holdings and Unisteel Technology, all invested out of Singapore. "KKR is bullish on Vietnam. It is a large country with a young and growing population. In the past decade, there has been considerable economic progress, structural reforms, and a notable increase in living standards," a KKR spokesman told AVCJ. "Demographic and social trends favor the rise of domestic consumption. These include: population growth, labor force growth, urbanization, rising wages, rising disposable incomes."

According to AVCJ data, the amount of funds raised for Vietnam between 2009 and 2010 rose by more than 1,653%, from $9.2 million to $161 million. Fundraising in Vietnam reached its peak in 2007, when $1.4 billion was raised, but the boost from 2009 to 2010 exhibits the renewed interest in the market as the global economy heals.

If past example is anything to go by, KKR may have correctly placed its bets. In November, Mekong Capital exited its stake in Masan Food for gross return multiples of 2x and a gross IRR of 61% on the shares sold over an 18-month period.

"Masan Consumer is well-positioned to benefit from the favorable domestic trends of rising wealth, urbanization, and a young population," KKR's spokesman added.

Masan Consumer's parent, Masan Group, is one of the largest listed private sector groups in the country. Aside from Masan Consumer, the holding group also owns financial service brand Techcombank and Masan Resources, which is involved resources and materials. In January, Mount Kellett Capital Management invested $100 million for a 20% stake in Masan Resources, which owns the Nui Phao mine in Northern Vietnam.

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• Topics
• Southeast Asia
• Buyouts
• Consumer
• KKR