Alibaba, Baring Private Equity Asia invest $400m in Masan retail arm, The CrownX

Tuesday, May 18, 2021 11:45

Customers shop at a Vinmart store. — Photo courtesy of Masan

Masan Group Corporation (HOSE: MSN) and a consortium led by Alibaba Group and Baring Private Equity Asia on May 18 announced the signing of definitive agreements for the acquisition of a 5.5 per cent stake in The CrownX for a cash consideration of US$400 million.

The CrownX is Masan’s integrated consumer retail arm that consolidates its interests in Masan Consumer Holdings (MCH) and VinCommerce (VCM). The transaction implies a pre-money valuation of $6.9 billion for the company, or $93.5 per share.

Masan will own 80.2 per cent of the company after the consortium’s investment.

The formation of The CrownX last year brought together two industry leaders to form a consumer and retail powerhouse. As part of Alibaba’s investment, The CrownX will now partner with Lazada to build the company’s digital presence and capabilities and accelerate the offline to online (O2O) market in Viet Nam.

The transaction marks a shared vision across the company’s shareholders that The CrownX has the potential to establish Viet Nam’s first tech-enabled consumer ecosystem and expand its reach to serve consumers nationwide.

Danny Le, chief executive officer of Masan Group, said: “This strategic partnership will accelerate our ability to achieve our goal of transforming The CrownX into a one-stop shop to serve consumers’ everyday needs, whether offline or online, ‘Point of Life.’

“Our immediate priority is to modernise Viet Nam’s grocery market and develop an unparalleled consumer proposition from assortment to shopping experience.

“I strongly believe that this partnership will reduce our learning curve and enable us to reach our endgame more efficiently and effectively.”

Janice Leow, managing director at BPEA, said: “We are delighted to be partnering with Masan and Alibaba, and believe this strategic investment has the potential to supercharge The CrownX’s growth in a nascent retail market and create the largest consumer ecosystem in Viet Nam.

“As a long-term investor in the country, we think Viet Nam has a long runway for growth supported by strong macroeconomic tailwinds and attractive demographics.

“The CrownX also has tremendous digital potential, particularly in e-commerce and data analytics. BPEA prioritises digital transformation in all of our portfolio companies, and we look forward to working with the company in its next stage of growth.”

As a part of the transaction, VCM will enter a strategic cooperation agreement with Lazada, Alibaba’s Southeast Asian e-commerce platform.

It will be the grocery retailer of choice on Lazada in Viet Nam.

The parties will share know-how, co-develop analytics to develop grocery as a key online category, transform VCM’s offline stores into pick-up points for online orders, and explore synergies between the respective parties’ logistics platforms for service and cost optimisation for consumers.

Grocery accounts for 50 per cent of Viet Nam’s retail market and 25 per cent of consumer wallet share and is of essential daily use, but online penetration is still nascent.

Masan targets The CrownX’s online gross merchandise accounting for at least 5 per cent of its total sales in the near future.

Credit Suisse (Singapore) Limited and Deutsche Bank acted as the exclusive financial advisors respectively to Masan Group and BPEA. The transaction is subject to customary corporate regulatory approvals.

Masan is also in advanced discussions for a further strategic investment of $300 - 400 million in The CrownX from other investors, and these are expected to be wrapped up in 2021. — VNS

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