Alibaba leads US$400m investment in Vietnam retail giant

[SHANGHAI] Alibaba Group Holding Ltd. and partners are investing US$400 million in Vietnamese conglomerate Masan Group Corp's retail arm, a deal that will expand the Chinese e-commerce giant's online groceries business in Southeast Asia.

Alibaba and Baring Private Equity Asia are leading a consortium that will take a 5.5 per cent stake in The CrownX, which holds Masan Group's interests in Masan Consumer Holdings and VinCommerce, while the conglomerate will own 80.2 per cent of the firm following the investment, according to a statement Tuesday. The deal implies a pre-investment valuation of US$6.9 billion for The CrownX, the statement showed.

Masan is in advanced talks with other investors on a further investment of US$300 million to US$400 million into The CrownX that is expected to close in 2021, the company said.

As part of the deal, the Vietnamese retail firm will team up with Alibaba's Southeast Asian unit Lazada to expand its digital business in the country. Jack Ma's firm is seeking to expand its foothold in Southeast Asia, home to more than 650 million people, as competition and regulatory scrutiny intensify in its home market of China. Vietnam's digital economy is forecast to grow to US$52 billion by 2025, an annual 29 per cent increase from 2020, according to estimates by Bain & Co, Google and Temasek.

VinCommerce will provide groceries to Lazada's e-commerce platform in Vietnam and turn its physical stores into pick-up points for online orders, according to the statement. Groceries account for half of the country's retail market and a quarter of consumer spending, but online penetration is still nascent,the statement said.

"Our immediate priority is to modernise Vietnam's grocery market and develop an unparalleled consumer proposition from assortment to shopping experience," said Danny Le, chief executive officer of Masan Group.

Masan Group is controlled by Vietnamese tycoon Nguyen Dang Quang. Founded in 1996, the Ho Chi Minh City-based firm is best-known for its fish sauce which it sells under brands including Chin-Su and Nam Ngu, according to its website. It has interests in retailing and mining as well as a stake in Vietnam Technological & Commercial Joint-Stock Bank, commonly known as Techcombank. Its Vincommerce arm operates one of the country's largest convenience store chains.

The CrownX is targeting online gross merchandise value to account for at least 5 per cent of total sales in the coming years.

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