Bain commits $200m to Vietnam's Masan
Bain Capital has agreed to invest at least USD 200m in Vietnamese conglomerate Masan Group. It is the private equity firm's first investment in Vietnam.
Bain will acquire Masan shares at VND 85,000 apiece, according to a filing dated October 2. This represents an 11.4% premium to the closing price on the prior trading day, September 29. The stock closed on NVD 77,400 on October 2, giving the company a market capitalisation of around VND 110.2trn (USD 4.5bn).
The private equity firm will purchase convertible dividend preference shares, which can be converted to ordinary shares at a 1:1 ratio. An annual preferential dividend amounting to 10% of the par value of each share will kick in after five years. After 10 years, any outstanding shares will be automatically converted to ordinary shares.
Masan has interests spanning financial services, natural resources, and food. The company framed Bain’s investment as motivated particularly by its traction in the latter category, where its market share in the past 18 months is said to have reached 80%.
It comes as Masan transitions from a pure branded products company into an integrated consumer-retail platform with a view to accessing growth potential across the consumer value chain. This has included significant investment in consumer-related technology upgrades in partnership with affiliated lender Techcombank.
"We are thrilled to partner with Masan for an important investment in Vietnam and believe that Masan has the right fundamentals, reach, and growth strategy to succeed in a high-growth and compelling consumer market,” Barnaby Lyons, a partner at Bain, said in a statement.
“Masan is one of the most trusted brands in Vietnam with significant reach to households with the ability to anticipate consumer tastes and build out an innovative product pipeline to meet those needs.”
Vietnam’s consumer economy is attracting a wider range of investors as new openings emerge across the value chain amidst evolving themes around premiumisation and a shift from unbranded to branded goods in more organised shopping formats.
Masan has aimed to tap these themes via its WIN membership platform, which the company claims allows it to provide more personalised and targeted products and services. WIN currently has 7m members and is hoped to reach 10m within the years and 30m by 2025.
Revenue fell 14% during the 2022 financial year to VND 76.2trn, while EBITDA declined 12% to VND 14.4trn. Net profit was down 58% to VND 3.6trn, with the company citing one-off effects related to the divestment of a major animal feed business and poorer performance by a metals and minerals business.
Bain's investment was described as part of an equity round that would raise up to USD 500m. In parallel, Masan said it would pursue strategic alternatives to equity, including diluting its interest in non-core businesses. This is hoped to bolster the company’s liquidity profile and achieve a sustainable net debt-to-EBITDA ratio below 3.5x on a steady-state basis.
Masan has a history of private equity investment, with local private equity firm PENM Partners backing the company as early as 2008 and going on to back several subsidiaries through 2010. PENM realised its latest exit in 2017 when USD 100m worth of shares were sold to KKR.
Meanwhile, Singapore’s GIC acquired a 6% stake in 2016 for VND 3.1trn and an additional 4.7% stake alongside unspecified co-investors for about USD 209m in 2018. The latter transaction provided an exit for KKR.
Several Masan subsidiaries have also attracted investment. KKR committed USD 359m to Masan Consumer Corporation - now part of Masan Group - between 2011 and 2013. In conjunction with its group-level investment in 2017, the private equity firm also injected USD 150m into animal feed supplier Masan Nutri-Science.
In 2021, Alibaba Group and BPEA EQT paid USD 400m for a 5.5% stake in The Crown X – the combined consumer goods and grocery retail operations of Masan and Vingroup. Core to the thesis was advancing various digitalisation initiatives and revamping the loyalty system.
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