KKR Masan

KKR invests a further $200 million in Vietnam’s Masan Consumer

KKR more than doubles its stake in Masan Group’s food and beverage subsidiary to $359 million, making it Vietnam’s biggest private equity deal.

Masan Group, one of Vietnam’s biggest private sector business groups, said yesterday that Kohlberg Kravis Roberts (KKR) has agreed to increase its equity stake in its Masan Consumer subsidiary. The US-based private equity firm will inject $200 million, adding to the $159 million it invested in April 2011.

It ranks as the biggest private equity transaction in Vietnam so far, although not the biggest foreign inbound investment. Last year, Japan’s Mizuho Financial Group paid $567 million for 15% of Vietcombank.

The attraction of Masan Consumer to private equity is its dominant position in the local food and beverage market. It is the leading maker of fish sauces, instant noodles and instant coffee, with well-known domestic brands, such as Chin-Su soy sauce and Omachi noodles, and is expected to post revenues of nearly $500 million for 2012. The company was set up in 2000, and sales should continue to grow as Vietnam’s economy and middle class expands.

“Doubling our investment in less than two years demonstrates our strong conviction in Vietnam’s growth story, Masan Group as our partner of choice in Vietnam and Masan Consumer as a leading Vietnam consumption platform,” said Ming Lu, regional head of KKR, Southeast Asia, in a joint statement.

The additional investment is the first KKR has taken since it opened its Singapore office last October. It already had six offices within the region, and is raising a $6 billion Asia fund. Worldwide, it has more than $66 billion in assets under management.

Masan Consumer hopes to use KKR’s global retail and consumer experience and will work with KKR Capstone, a team of operating executives attached to KKR’s portfolio companies, said the statement. The public relations firm that released the announcement could not confirm whether KKR would have board representation.

“Our core belief as a group is the structural consumption of growth and rising middle class potential of Vietnam,” said Madhur Maini, CEO of Masan Group. “We believe KKR is the right partner to broaden and deepen our consumption platform to capture this opportunity.”

KKR’s previous holding in Masan Consumer was 9.82%, and the increased stake will be through the purchase of a combination of primary and secondary shares. Neither party will disclose the percentage size of KKR’s new holding in the company, nor will they reveal the price and multiple it paid.

It is unclear how or when KKR would eventually exit its investment, or what the firm’s targeted total return might be. Masan Group’s shares are up about 30% since April 2011, according to Bloomberg.

Masan Group is one of the largest listed private sector groups in Vietnam, with a market capitalisation of around $3 billion. Investors include TPG, Denmark’s BankInvest, Dragon Capital, Goldman Sachs and the IFC. As well as its consumer subsidiary, it owns a resources business in which Mount Kellett Capital Management, another US private equity group, has a 20% stake and also Techcombank.

The KKR transaction is subject to regulatory approvals and other closing conditions.

¬ Haymarket Media Limited. All rights reserved.

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