Vietnam's 'king of shrimp' courts foreign investors

[HO CHI MINH CITY] Minh Phu Seafood Corp., which sells black tiger shrimp to Costco Wholesale Corp. and Wal-Mart Stores Inc., will seek to sell half of itself to foreign strategic investors to help fund overseas expansion.

Vietnam's largest seafood exporter by value aims to complete the stake sales this year after it gets approval to delist from the Ho Chi Minh City Stock Exchange this quarter, Chief Executive Officer Le Van Quang said in an interview. The company forecasts net income will jump 55 per cent to 1.416 trillion dong (S$89 million) this year, with sales reaching US$1 billion, mainly from exports, he said.

"We're looking for strategic foreign investors to help maximize our advantages and potential as our goal is to become a global shrimp company by 2020," Quang, dubbed the "king of shrimp" by local media, said in an interview on Jan. 24 in the Mekong delta province of Hau Giang.

Vietnam is considering proposals to raise the foreign-ownership limits of listed companies. Vietnamese companies are increasingly in need of foreign strategic investors for capital and expertise to expand internationally.

Under current rules, foreign investors can hold a maximum 49 per cent of a listed company's stakes. A draft measure proposes that foreign investors be allowed to make "unlimited" investments in non-voting shares of public companies.

"If we stay on the Ho Chi Minh Stock Exchange, we can't raise enough target capital," said Quang, who plans to raise the company's registered capital 20 per cent to 840 billion dong.

Minh Phu gained 0.9 per cent to 110,000 dong a share in Ho Chi Minh City trading on Jan. 29. Its share price rose more than four-fold last year as the company bought back shares, giving it a market capitalization of 7.5 trillion dong now, according to data compiled by Bloomberg.

A dozen foreign investors from the U.S, Japan and Canada have expressed interest in the stake sales, Quang said at his office at company subsidiary Minh Phu Hau Giang Seafood Processing Joint-Stock Company. Mitsui & Co. Ltd. holds a 31 per cent stake in the Mekong delta-based subsidiary.

Minh Phu will choose one or two partners this year, Quang said. France-based Artemis's Red River Holding owns a 9.47 per cent stake and Vietnam Investment Fund holds 7.38 per cent, said Quang. The company failed to secure a partnership deal with CP Group, Thailand's largest shrimp exporter, in 2012, he said.

Quang said he and his family want to drop their stake holdings to no less than 35 per cent from 79 per cent currently.

Minh Phu's sales and profit will grow 15 per cent to 20 per cent annually over the next five years, Quang said. The company has helped propel Vietnam to become one of the fastest- growing seafood exporters in the world, with the national industry's shipments rising 18 per cent to US$7.9 billion in 2014. Vietnam's shrimp exports climbed 25 per cent to a record US$4.1 billion last year.

Shrimp prices hit a record last year due to a lack of global supply when diseases affected shrimp from Thailand, said Dinh Duc Minh, senior analyst at Saigon Securities Inc.

"If Thailand resolves shrimp diseases and the supply increases again, the shrimp prices will drop," Minh said. "In that case, Minh Phu and other shrimp companies in Vietnam can't earn profits as high as in 2014."

The company's exports to more than 60 countries jumped 41 per cent to US$730 million last year, Quang said. The United States is its largest market, comprising more than a third of last year's exports, followed by Japan and Europe.

Quang wants to find strategic investors who can help the company expand its production and market overseas, he said. The company is working with Edmond de Rothschild Suisse SA to find investors, he said.

Quang said his company plans to build shrimp processing companies and distribution units in India, Indonesia and the Philippines in the next five years. The company, which runs a distribution unit in California, plans to build a 40,000-ton shrimp processing plant in Ca Mau province this year and another with the same capacity in Hau Giang province in the next three years.

"My goal is to produce shrimp for everyone's meal," said Quang, "Shrimp isn't food only for the rich any more."

BLOOMBERG