Kohlberg Kravis Roberts has topped up its most recent Vietnam investment by injecting $200 million into Masan Consumer, a subsidiary of the Masan Group, according to the firm. The capital will be used to further build-out consumer businesses.
The two companies said on a conference call that they have signed a definitive agreement that KKR will increase its equity stake in the business. However, they did not disclose the size of the stake.
This is KKR’s second investment in Masan Consumer, having acquired 10 percent of the company in April 2011 for a total sum of $159 million. The combined investment becomes the largest private equity deal completed in Vietnam and also KKR’s biggest investment in Southeast Asia, according to the firm.
Many private equity firms have shied away from Vietnam’s investment opportunities due to a poor macro-economic environment including high inflation, a faltering currency and high levels of corruption, industry sources say.
Firms such as Southeast Asia-focused Navis Capital Partners are relying on export-related investments, which mitigate the risks of depending on the troubled domestic economy.
In January, Navis acquired Vietnamese seafood processor Godaco for about $35 million, Private Equity International reported earlier. Godaco produces and exports low-cost seafood worldwide, with plans to expand into the US market.
However, KKR is confident that Vietnam’s domestic consumer story is attractive and growing, head of Southeast Asia at the firm, Ming Lu, said on a press call.
“[We have] a strong conviction in Vietnam’s structurally attractive consumption growth story,” he explained. “Our entire focus is on helping the company build an exciting consumer platform, broadening the categories into a wider-range of consumption [sectors].”
Also on the call, Madhur Maini, chief executive of Masan Group, noted, “We think this story has long legs to grow. [Vietnam has] a young population – 50 percent of the population is below 25 years of age – and middle-class households are expected to double in the next seven years by 2020.”
KKR is a US-headquartered private equity firm with $66 billion in assets under management. The firm also recently raised the largest-ever Asia-dedicated fund, reaching its target of $6 billion soon after opening its seventh Asia-based office in Singapore, a source close to the matter recently told PEI.
KKR is yet to officially announce a final close on the fund.