Masan moves demonstrate room for cross-sector growth

Masan Group’s activities over the past year or so have shed a spotlight on Vietnam’s merger and acquisition market thanks to the group’s dealmaking efforts to transform business models.

The consumer sector, particularly retail, has seen the most active merger and acquisition (M&A) transactions in recent years. In the list of 50 outstanding M&A deals in the 2021-2022 period as voted by the Vietnam M&A Forum, Masan Group is the most notable name in the market in the country.

Last year, South Korean conglomerate SK Group acquired a 16.26 per cent stake in VinCommerce, the subsidiary of Masan Group, for a total cash consideration of $410 million.

Earlier this year, The Sherpa, a subsidiary of Masan Group, increased ownership in food and beverage chain Phuc Long to 85 per cent. The Sherpa also spent $65 million in exchange for a 25 per cent stake in Trusting Social.

In Vietnam, Masan, a top Vietnamese corporation, has transformed from a company specializing in producing consumer goods such as fish sauce and soy sauce. It now ventures into different fields, including brand chilled meat processing and retail, which is all part of the group’s development strategy to meet the changing daily needs of consumers. 

“As Masan aims to serve 100 million customers, it is vital for the group to adopt AI and machine learning to expand its reach to customers. Masan has teamed up with Trusting Social to build a customer-centric platform, particularly in the field of consumer services. Besides that, we also evaluate the demand from customers without access to financial services. Thus, by partnering with banks, we can offer customers loans at the most affordable rates,” said Masan Group CEO Danny Le.

Nguyen Cong Ai, deputy general director at KPMG Vietnam, said, “I think Masan’s transformation doesn’t take place separately but it is part of a larger global movement. Customers are increasingly demanding personalised services and expect more comprehension from service providers.”

Commenting on the global M&A trends, Le said that before the pandemic, investors were looking for investment opportunities at companies with revenue growth. However, in recent times, they have increasingly paid attention to companies that are growing both revenues and profit.

“The current environment presents opportunities for strategic investors, especially those with long-term vision and patience. It is expected that they will make more M&A deals with companies to build a better business platform in the coming time. On the other hand, this is also the time for local companies to plan their long-term strategies to attract better M&A opportunities,” Le added.

In one example of the transformation, Masan’s WinCommerce retail chain has undergone significant changes in store format and scale expansion.

The group has also innovated its product portfolio and negotiated with suppliers to offer the best pricing to customers. As a result, a total of over 3,000 WinMart+ stores have been put into operation, with new stores consistently outperforming the old ones.

Despite extensive expansion, WinCommerce is still improving its profits. Earnings before interest, taxes, depreciation, and amortisation sat at 3.3 per cent in the third quarter of 2022 against 2.2 per cent in Q2. The increase is attributable to the improved efficiency of store operations and the number of visitors to stores. The on-quarter increase is 66.2 per cent, to VND251 billion ($10.12 million).

In September, Masan introduced the WIN multi-utility retail model with many one-stop shop services, ranging from groceries (WinMart+), financial services (Techcombank), and tea and coffee (Phuc Long) to pharmacies (Dr. Win) and telecommunication services (WINtel, formerly known as Reddi).

According to the latest report from analytics company GlobalData, the third quarter of 2022 was the worst-performing quarter in terms of global M&A deal activity, with M&A deal value dropping by 48 per cent compared to the same quarter of 2021. Global markets recorded over 8,250 M&A deals worth $544 billion, compared to around 9,600 deals worth $1.05 trillion recorded in the same quarter last year.

Nevertheless, Vietnam’s consumer market is capturing more attention from foreign investors thanks to its ample opportunities for financial investment in Vietnam.

According to a recent report launched by HSBC, Vietnam’s per capita income is expected to increase significantly over the next decade. Vietnam is set to become the 10th largest global consumer market in 2030.

Vietnamese consumers look set to overtake their Turkish, Thai, and British counterparts by the end of this decade, and the country’s consumer market will likely be bigger than Germany’s by 2030.