Thai trading company Berli Jucker has mandated HSBC and Mizuho for its €650 million ($835 million) bridge loan, according to two sources familiar with the matter. The loan, which has a tenor of one-and-a-half years, will largely be denominated in euros and will go towards footing the bill for its acquisition of German retailer Metro's cash-and-carry business in Vietnam.
HSBC had advised Metro on the sale while Lazard had advised Berli Jucker. It is unusual for a sell side adviser to be financing an acquisition but previously, HSBC was also one of the seven lenders that extended a bridge loan of about $6 billion to Thai retailer CP All to fund its acquisition of retailer Siam Makro last year. In that transaction, HSBC had advised Dutch trading firm SHV, which sold its stake in Siam Makro to CP All.
Berli Jucker, which is controlled by Thai tycoon Charoen Sirivadhanabhakdi agreed to buy the cash and carry business for an enterprise value of €655 million in August.
The deal moved a step closer to closing when independent financial adviser Jaydee Partners recommended that shareholders approve the transaction. Shareholders will be meeting on October 13 to vote and the transaction needs at least 75% of the votes from those present to go ahead. As TCC Assets, Charoen's privately held investment vehicle, holds a 73.7% stake in Berli Jucker and will be voting, there is little chance of it getting voted down, however.
The company's stock has come under selling pressure since it announced the deal and subsequently a Bt16.2 billion ($465 million) rights issue on August 19.
The deal will beef up Berli Jucker's retail presence in the underpenetrated market that is Vietnam. Berli Jucker is poised to acquire 19 wholesale stores across the country with about 3,600 employees, and once the deal is completed, it will become the second-largest retailer in the grocery market in Vietnam after domestic retailer Saigon Co-op.
Vietnam's retail market is dominated by traditional players, with modern grocery penetration hovering at about 4%, a far cry compared to 40% for other Southeast Asian countries. Vietnam is the third most populous country and sixth largest economy in the region, with forecast real GDP growth of approximately 5.6% over the next three years.
The deal was an exit for Metro, the third-largest retailer globally, from Vietnam's retail market and some say there is plenty of low hanging fruit for Berli Jucker to improve the way the business in run in Vietnam. The deal will give Berli Jucker scale in Vietnam and enable it to cover the value chain.
Berli Jucker has roots dating back to 1882, when Albert Jucker and Henry Sigg established a company in Thailand under the name Jucker and Sigg & Co. The company was originally a trade representative for French, British and Italian companies, as well as other foreign insurance companies and banks.
