Vietnam Strategic Investment Results Gain Momentum
Exercise of 'Selective Priority Investment Rights' Secured through Preemptive Investment in Masan Group
Securing Advantageous Position for Southeast Asian Retail Chain Investments
[Asia Economy Reporter Hwang Yoon-joo] SK Group has made a strategic investment by acquiring a large stake in Vietnam's largest retail company. Vietnam is one of the few countries that achieved positive economic growth despite the COVID-19 pandemic, and it is considered a country with promising rapid growth in the local consumer market. SK plans to expand its investment scope in Vietnam to logistics, electronic payments, and other retail value chain sectors starting with this investment.
On the 6th, SK announced that it signed a contract to purchase a 16.3% stake in Vingroup Commerce (Vincormmerce) from Masan Group, Vietnam's largest food and beverage company, for $410 million (approximately 460 billion KRW). Previously, Masan Group acquired an 83.7% stake in Vincormmerce from Vingroup, Vietnam's largest private enterprise. SK purchased its stake under the same terms as that transaction. In 2018, SK acquired a 9.5% stake in Masan Group as a strategic investor and exercised the 'selective preemptive investment rights' secured at that time for this purchase.
In 2018, SK Group established a Southeast Asia investment corporation with major affiliates such as SK Inc. and SK Innovation. Since then, it has made strategic investments in leading local private companies such as Masan Group and Vingroup. Vietnam has mainly attracted domestic manufacturers like Samsung Electronics and Taekwang, and among retailers, Lotte, Shinsegae, and GS have directly entered the market by opening local stores. It is rare to see such large-scale capital investment based on the growth potential of the local wholesale and retail market. According to KOTRA, the amount invested by Korean companies in Vietnam's local wholesale and retail sectors over the past three years (2018?2020) was only about $402 million.
Vincormmerce operates over 2,300 convenience stores and supermarkets locally, holding about half of the retail market share, making it the largest retail company. Its sales grew approximately 30% from $1.1 billion in 2019 to $1.4 billion in 2020, the first year after acquisition by Masan Group. This year, sales are expected to reach $1.8 billion. It is said that Vincormmerce's market dominance has become more solid by creating synergy with Masan Group's strength in the food and beverage business.
For SK, this investment not only offers the potential for significant capital gains but also secures additional investment rights in Masan Group's comprehensive consumer goods business, which is being intensively developed. Modern retail markets such as convenience stores and supermarkets in Vietnam have been growing at over 25% annually. Despite the global economic downturn caused by COVID-19 last year, Vietnam managed a GDP growth rate of 2.91%. An SK official said, "We expect Vincormmerce to grow into an omni-channel business combining online and offline platforms like Alibaba or Amazon," adding, "This investment targets the future retail value chain expected to experience high growth in the Southeast Asian market."
The contract signing ceremony, held via video conference, was attended by Park Won-cheol, CEO of SK Southeast Asia Investment Corporation, and Truong Cong Tang, CEO of Vincormmerce, along with other key executives from both groups. CEO Park said, "Masan Group is the optimal partner for success in the Vietnamese market," and added, "We will spare no support to create new success stories." CEO Truong Cong Tang said, "Vincormmerce has strengthened its sales network and improved operational efficiency through customer-centric management," and added, "SK's investment will be the starting point for Vincormmerce to take another leap forward in the Vietnamese market."
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