Dragon Capital, VinaCapital buy FPT Retail stakes

Information and communication technology group FPT Corporation has sold six million shares or 30 per cent of its stake in FPT Digital Retail JSC to funds managed by and associated with Dragon Capital and VinaCapital.— Photo vietnambiz.vn

The deal completes the first stage of FPT’s plan to divest from its retail arm, FPT Retail, reducing its ownership to 55 per cent from the previous 85 per cent.

The value of the deal was not revealed by either FPT or the two funds. FPT will still keep control over its retail unit with a post-sale 55 per cent stake, and the income from the deal may not be recorded in the group’s third-quarter earnings report.

In the second stage of the divestment plan, FPT could sell an additional 10 per cent stake in FPT Retail to other investors via an initial public offering (IPO), HCM City Securities (HSC) had said in a report in July. The second stage is to be completed by the end of 2017.

At the group’s annual shareholder meeting held in April, FPT Chairman Truong Gia Binh had said that selling the distribution and retail arm was a must so that FPT could become a pure ICT group with rapid growth.

Andy Ho, chief investment officer of VincaCapital and managing director of the Vietnam Opportunity Fund, was quoted in the FPT’s press release on Friday as saying “This transaction enables us to make a meaningful investment in a premier, unlisted company.”

“The consumer sector is one of our favourites, and Vietnamese people have shown a huge appetite for mobile phones and accessories, which is their primary tool to communicate and access the Internet,” he said.

With a population of nearly 100 million people and annual retail revenues of US$110 billion, Viet Nam’s consumer market is among the most lucrative retail markets worldwide and the retailing of mobile phones and technology gadgets has posted impressive growth, said Vu Huu Dien, portfolio manager of Vietnam Enterprise Investment Limited (VEIL) under Dragon Capital.

“FPT Retail, despite not being in the market for long, has demonstrated itself as a leading retailer. We highly value the professionalism of the management at FPT Retail, as well as FPT Corporation’s corporate governance and operation, which serve as a firm foundation for FPT Retail’s future robust success in Viet Nam’s retail market,” Dien said.

FPT Retail is one of the leading retailers in Viet Nam. It was operating 438 stores nationwide as of July 2017. In the first six months of 2017, it earned nearly VND6.2 trillion (US$275.5 million) in revenue, up 31 per cent year on year, and VND141 billion in pre-tax profits, up 44 per cent year on year.

For 2017, FPT Retail has set growth target of 27.5 per cent and 40 per cent in revenue and pre-tax profits, respectively, by increasing sales in existing stores and opening new ones in areas where smart phone penetration is low at present. The company said e-commerce and an omni-channel approach will be used to reach the business targets. — VNS