Overview of the signing ceremony. (Photo: Vingroup)
According to the local media, SK Group has registered to buy 154.3 million shares of Vingroup through a private placement and 51.4 million secondary shares owned by its subsidiary VinCommerce. At an average price of VND113,000 per share, the total value of the deal is some VND23.3 trillion, equivalent to US$1 billion.
SK Group would hold a total of 205.7 million shares of Vingroup, equivalent to 6.1% of its charter capital. The transaction is subject to regulatory approval. Credit Suisse acted as the sole advisor to Vingroup.
SK Group in a statement on May 16 said it will actively seek new business opportunities in Vietnam as a strategic investor in conglomerate Vingroup.
The strategic investment is a clear demonstration of SK’s trust in Vingroup as well as an endorsement of both parties’ confidence in the growth potential in Vietnam. The SK Group will become a strategic partner of Vingroup following the transaction.
After signing the strategic partnership, Vingroup and SK will complete regulatory procedures, including entering new shares on the Hochiminh Stock Exchange.
The two intend to enter into future joint strategic investments that will leverage each party’s expertise and enhance the ability of both to serve the Vietnamese market and the region.
The strategic partnership signing ceremony between Vingroup and SK Group on May 16. (Photo: VNA)
Woncheol Park, representative director of SK South East Asia Investment said, “We believe partnering with a local champion, such as Vingroup, to explore new business opportunities is an ideal strategy for SK’s expansion in South East Asia.
Further, we are expanding in Vietnam with a long term goal of contributing to the local agenda and the economic advancement of the nation. In this regard, we have a lot of respect for Vingroup and the significance of their role in the Vietnam’s economy. Through this strategic partnership, we greatly look forward to working closely with Vingroup and create vast synergies for both groups and for Vietnam.”
In March, Bloomberg reported SK Group, through its investment arm SK South East Asia Investment, decided to invest US$1 billion acquiring shares of Vingroup.
Earlier, the local group had announced a private placement plan to mobilize at least VND25 trillion, or nearly US$1.1 billion. The group expected to offload 250 million shares or 7.8% of the share amount in circulation to a maximum of five foreign investors, and the price would be not less than VND100,000 (US$4.3) apiece.
Of the total fund raised from the process, around VND10 trillion (US$430.44 million) would be utilized for debt restructuring, VND6 trillion (US$258.26 million) to invest in Vingroup’s subsidiaries, including VinFast, VinTech and Vinsmart, while Vingroup expected to allocate VND9 trillion (US$387.37 million) as short-term loan for business operations of the group and its subsidiaries.
Last September, SK Group invested US$470 million to purchase 110 million treasury shares of Masan Group Corporation, equivalent to a 9.5% stake, thus becoming its largest foreign shareholder.
SK is expanding presence in Vietnam.
The SK Group is the third-largest multidisciplinary corporations in South Korea by asset size. It was founded in 1953 and has 111 subsidiaries in various sectors including energy, chemicals, telecommunications, ICT, semiconductors, technology, electronics, power engineering, logistics and service sectors. It operates globally in over 40 countries and territories and had combined revenues of $132 billion and assets of $184 billion as of year-end 2018.
Last August, its five affiliates established a joint entity named SK Southeast Asia Investment Pte. Ltd. in Vietnam to launch promising opportunities in the booming Southeast Asian market.
Nguyen Viet Quang, vice president and general director of Vingroup, said at the signing ceremony, “We welcome SK as Vingroup’s strategic partner. As a leader in many of its business areas and with its solid foundation in management and technological excellence, SK will bring valuable expertise to help Vingroup reach new heights, especially in the industry and technology sector.”
Vingroup, once a real estate and retail conglomerate, has grown to become Vietnam’s largest listed firm with a market capitalization of more than US$16 billion. The company recently launched its first smartphones and cars, and is looking to foray into artificial intelligence.
Vingroup is the largest private-owned group in Vietnam and ranks in the Top 10 Largest Enterprises in Vietnam (including FDI and State-owned enterprises), with a main focus on Services, Industry and Technology, which includes real estate, consumer retail, automobile and motorcycle manufacturing, smart devices, agriculture, education, and healthcare. In 2018, Vingroup announced its vision to become a world-class Technology - Industrials - Services group.
