Tycoons jostle for stakes as Vietnam's buy-Thai market booms

Parkson Retail

20/04/2016 24:00

* Beer billionaire Charoen Sirivadhanabhakdi leading charge 
    * Thai products enjoy good reputation vs cheaper Chinese 
fare 
    * Last year's $4 bln M&A record set to be broken - analysts 
    * Thais hedging against uncertainty at home 
 
    By My Pham 
    HANOI, April 20 (Reuters) - Through supermarkets, malls, 
dairy and beer, Thai tycoons are pursuing deals in Vietnam that 
could break mergers and acquisitions records in the upwardly 
mobile market of 90 million people, at the expense of their 
Asian rivals. 
    Vietnam's swelling middle-class sees Thai products as better 
and more affordable than Japanese and Korean imports, and vastly 
preferable to the cheap but unpopular goods that flood across 
the border from giant neighbour China. 
    "I prefer Thai goods. I don't have to worry if they're 
contaminated," Thai import shop customer Hong Anh said in Hanoi, 
reflecting the widely held view that Chinese goods are not only 
low-quality but hazardous as well. 
    Billionaire beer magnate Charoen Sirivadhanabhakdi is 
leading the Thai charge into Vietnam through his Thai Charoen 
Corp (TCC), which has finalised a 655 million euro ($876 
million) purchase of German retailer Metro's Vietnam chain. TCC 
subsidiary Berli Jucker  BJC.BK  is among the bidders for Casino 
Group's  CASP.PA  Big C supermarkets in Vietnam, worth about $1 
billion. 
    "We fully expect Thai companies to continue to view Vietnam 
in a favourable manner and to continue to invest and grow 
through M&As," said John T Ditty, managing partner at tax 
advisory firm KPMG. 
    "The Thai economy has been somewhat flat," he added, with    
Moody's expecting Thailand's real GDP growth to fall to about 
2.5 percent this year from 2.8 percent in 2015 in the wake of 
paralysing anti-government protests and a military coup. 
    In Vietnam, by contrast, things are looking up. Average 
incomes have quadrupled during 15 years of economic growth at 
over 5 percent. Retail sales will hit $179 billion by 2020, from 
less than $110 billion last year, reckons VietinBank Securities. 
    Action like that is driving M&A deals to record levels. 
 urn:newsml:reuters.com:*:nL3N14Q3AQ Last year's $4 billion worth of mergers and 
acquisitions was the highest ever, boosted by Thai tycoon Santi 
Bhirombhakdi-linked Singha Asia's $1.1 billion worth of deals. 
Many analysts expect Thai firms to help smash that record in 
2016.  
    Dealmakers say Thais are among those awaiting new offers and 
drawn-out state divestments, betting on Vietnam's demographics 
and hedging against political and economic uncertainty back 
home. 
    Charoen is also expected to show interest in a mooted sale 
of an up to 45 percent government stake valued at $3.1 billion 
in Vietnam Dairy Products JSC, or Vinamilk  VNM.HM . His Fraser 
and Neave  FRNM.SI  already has an 11 percent share in Vietnam's 
top listed firm and is tipped to raise that if the government 
proceeds with the sale.  
     
    BIG DRINKERS 
    Charoen could be in the mix again if his Thaibev, maker of 
Beer Chang, succeeds in tapping into what is Asia's 
third-biggest beer market after China and Japan. Thaibev has 
shown interest in $2 billion brewery Sabeco, of which the 
government will sell 53 percent.  urn:newsml:reuters.com:*:nL3N12Y1QT urn:newsml:reuters.com:*:nL3N0YJ20J. 
    And rival Singha beer could enter the Vietnam market via the 
distribution network of consumer goods firm Masan Group 
 MSN.HM , after a $1.1 billion investment by Singha Asia 
Holdings in December.  urn:newsml:reuters.com:*:nL3N14E1NA 
    Retail giant Central, run by Thailand's third-richest 
family, the Chirathivats, is expanding its Robinson Department 
Store  ROBINS.BK  and has declared interest in Big C, adding to 
its $200 million purchase of a 49 percent stake in electronics 
retailer Nguyen Kim.  urn:newsml:reuters.com:*:nL4N0W734Z  
    Thai firms won't have it all their own way, however, as the 
likes of South Korea's Lotte  023530.KS , Japan's Aeon  8267.T , 
China's Parkson  3368.HK  and local firms Vingroup  VIC.HM  and 
KIDO  KDC.HM  expand. 
    But that's unlikely to deter Thais, said Chokedee Kaewsang, 
the deputy chief of Thailand's Board of Investment, who expects 
Thai firms to double or triple their Vietnam presence by 2019. 
    "They like Thai products, and the Thai brand," he said of 
Vietnamese. 
    What's more, the communist country's small-time capitalists 
are willing partners. 
    Hanoi businesswoman Bui Thuy Nga deals only in Thai goods 
and saw her small store quickly transform into a wholesaler with 
a dozen-page client list. It feeds a boom in Thai-only stores, 
which Nga estimates have tripled since 2012, selling anything 
from shampoo and stationary to plastics and toothpaste. 
    "Our business struggled at first and we didn't expect the 
market could grow that much," she said. 
 
 (Reporting by My Pham; Additional reporting by Pairat 
Temphairojana in Bangkok; Editing by Martin Petty and Stephen 
Coates) 
 ((my.pham@thomsonreuters.com; +84 4 3825 9623; Reuters 
Messaging: my.pham.thomsonreuters.com@reuters.net)) 
 
Keywords: VIETNAM THAILAND/M&A