Masan Group Corporation (HOSE: MSN) announced on October 2 that Bain Capital, a global private investment firm with assets worth US$180 billion under management, has agreed to invest at least $200 million in its equity at a price of VNĐ85,000 per share.

 

The money will be used to strengthen the company’s financial position and deleverage its balance sheet.

 

This marks Bain Capital’s first ever investment in Việt Nam and underscores its confidence in Masan’s ability to grab the immense opportunity offered by 100 million Vietnamese consumers’ daily grocery, financial and other life needs.

 

The investment will be in the form of Convertible Dividend Preference Share (CDPS) which can be converted into ordinary shares at a 1:1 ratio.

 

The CDPSs will get no preference dividend on top of the normal dividends paid to shareholders for the first five years. From the sixth year onwards there will be a 10 per cent per annum preference dividend on the face value of each outstanding CDPS.

 

On the 10th anniversary of the issuance the outstanding CDPSs will be converted into ordinary shares of Masan Group.

 

Danny Le, CEO of Masan Group, said about the transaction: “In the face of a challenging consumer environment, we have continued to invest in our platform and breakthrough innovations to position ourselves for the consumer upswing. We aim to be a profitable multiplier in Việt Nam’s golden consumption era.

 

“Bain Capital’s partnership is a strong validation of all the consumer-centric investments and transformations we have made over the past 18 months to win 80 per cent of the consumer wallet. We look forward to working with Bain to accelerate our vision to be the one-stop shop for consumers’ daily needs.” 

 

Barnaby Lyons, a partner at Bain Capital, said: “We are thrilled to partner with Masan for an important investment in Việt Nam and believe that Masan has the right fundamentals, reach and growth strategy to succeed in a high-growth and compelling consumer market.  

 

“Masan is one of the most trusted brands in Việt Nam with significant reach to households with the ability to anticipate consumer tastes and build an innovative product pipeline to meet those needs.

 

“We see a significant opportunity to invest behind Masan’s continued growth and first-class management team,” he said.

 

 Việt Nam is the fastest growing consumer market in Southeast Asia with its annual growth forecast to be 7.7 per cent between 2022 and 2040, underpinned by increasing urbanisation and an exploding consumer class with higher disposable incomes and evolving demands extending beyond basic needs to lifestyle and financial products.

 

 

Consumers buy Masan’s MEATDeli chilled meat. — Photo courtesy of Masan Group.

 

A leader in the Vietnamese consumer market, Masan has been transforming from a pure branded products company into an integrated consumer-retail platform to consolidate its growth potential across the consumer value chain.

 

In that respect, Masan has identified  three multi-year secular growth trends: premiumization and health-led innovations, served by its fast-moving consumer goods business Masan Consumer Holdings; transition from unbranded to branded and increasing demand for higher-quality animal proteins as provided by Masan MEATLife; and a shift from general trade to modern trade, accelerated by its retail platform, WinCommerce.

 

At the centre of Masan’s platform is WIN Membership, the platform connecting brands and consumers, which has reached seven million members and is set to reach 10 million by year-end and 30 million by 2025.

 

The WIN Membership platform allows Masan to provide more personalised, targeted products and services to better serve consumers, and will serve as the critical growth engine for the company’s businesses.

 

Bain Capital has extensive experience in investing to support growth and leadership at a wide range of consumer and retail businesses in Asia, including Schwan’s Company and Carver Korea.

 

Masan expects to close the transaction by the end of 2023 and continue to explore other strategic alternatives for equity capital, including diluting its interest in non-core businesses, to bolster its liquidity profile and achieve a sustainable net debt to EBITDA ratio of below 3.5x.

 

Jefferies Singapore Limited acted as the financial advisor to Masan Group, and the transaction is subject to customary corporate and regulatory approvals.

 

Masan is also in discussions with other investors to upsize the investment to up to $500 million subject to its capital needs and prevailing market conditions. — VNS