Creador, Navegar back Philippines supermarket chain

The Philippines has become a priority for Malaysia-headquartered Creador. The firm hired Omar Mahmoud, a 15-year veteran of HSBC, to head up the expansion along with less aggressive pushes in Thailand and Singapore. He spends 50% to 60% of his time in the Philippines.

“We were looking at annual food expenditure per person in every country around the world, and the Philippines is in the bottom quartile. Generally, the annual food expenditure per person is about USD 1,000. However, the share of their total income that they spend on food is actually top quartile. They spend 45% of their money on food,” Mahmoud told AVCJ in February last year.

“That’s why I’m looking a lot at the grocery and convenience food sector here.”

Creador, which invests in India as well as Southeast Asia, closed its fifth fund at around USD 700m last year, slightly exceeding the hard cap. Navegar, a Philippines specialist, raised USD 197m for its second fund in 2020, beating a target of USD 150m.

Navegar has backed Dali since at least August 2022, when its advisor Lenz & Staehelin confirmed a “substantial” investment.

The company brands itself as a “hard discount” retailer, meaning it sells a limited number of carefully chosen products in stores with relatively small floor area by supermarket standards.

Outlets are located in inexpensive areas, and there is little spending on advertising. They are clean and organised but not fancy. There are no baggers at checkout.

Creador observes that organised retail still represents only 20% of the overall retail market in the Philippines but that this share is growing rapidly. Part of its plan for Dali is to develop its supply chains to reduce reliance on imports.

“Hard discounting … has proven to be especially attractive to consumers facing post-pandemic challenges on incomes and household budgets,” Mahmoud said in a statement circulated to LPs.

“An investment at this time, at the cusp of its next phase of growth, is one we are confident will provide steady, sustainable returns whilst helping everyday Filipinos improve their access to essential and affordable food.”

Creador’s core asset in the Philippines is Mr DIY, a Malaysian home improvement retailer with at least 200 locations locally. The GP invested USD 140m in 2016 and took the business public in 2021. More recently, it made an early-stage investment in Uno Digital Bank. Financial inclusion is core to the thesis.

 

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• Topics
• Southeast Asia
• Consumer
• Expansion
• Philippines
• Creador
• Navegar
• Food