Kohlberg Kravis Roberts & Company is investing $159 million for a 10% equity stake in Vietnam’s Masan Consumer.
KKR will be issued 14 million new equity shares in a deal that values Masan Consumer at $1.6 billion. The company, which is part of Vietnam’s Masan Group, launched its IPO as Masan Food before broadening its business.
Other companies in the group include Techcombank and Masan Resources. Sources said KKR will get proportionate board representation and the private equity firm has a clear-cut idea of the roadmap to exit, even though it has not been formally decided.
Masan Consumer is Vietnam’s market leader in fish, soya and chilli sauce and the second-largest producer of branded instant noodles. For the most recent calendar year, Masan made sales of Vnd5.69 billion ($272 million) on which it earned a profit of Vnd1.25 billion.
The size of Masan Consumer suggests the deal has been done at aggressive multiples, though sources close to the situation pointed out that Masan is growing very quickly and between 2008 and 2010 its turnover went up 2.8 times, while profit grew more than three times. Neither company disclosed the forward multiples at which the deal has been agreed, but the high-growth trajectory is on course to be maintained, added the source.
The deal also captures how keen financial sponsors are to put money to work in Asia and how few investment opportunities are available in some target markets such as Vietnam. Goldman Sachs represented the seller and ran an auction on behalf of its client. There was substantial interest from financial investors and the fray finally narrowed to two contenders. KKR was selected on price as well as other qualitative considerations, said the source. The deal has been in the making for more than six months, though the pace accelerated considerably in March resulting in an announcement a few weeks later.
KKR is investing in Vietnam only days after it partnered with Pierre Chen to take private his Taiwanese company, Yageo, at a $1.6 billion valuation. KKR worked with UBS on the Taiwan deal. This is the fourth private equity investment in Asia by the NYSE-listed private equity firm and its first in Vietnam, the financial sponsor said in a written statement.
“We have recently taken our market leading food platform to transform it into a consumer platform and this transaction validates our consumer strategy,” said Madhur Maini, CEO of Masan Group in a written statement. “In addition, we view the next two years as transformational for the group and continue to build a war chest for strategic M&A.” The money being raised is expected to be used to finance growth, including M&A.
KKR was advised by Credit Suisse and Simpson Thacher & Bartlett.