Dragon Capital and VinaCapital acquire FPT Retail

Dragon Capital and VinaCapital have completed the purchase of a 30 per cent stake, equaling six million shares, in FPT Retail, aiming to plunge deeper in the retail sector in general and the mobile retail sector in particular.    

The two investors bought 30 per cent of FPT Retail's stakes

Managing director of VinaCapital Andy Ho told NDH that VinaCapital prioritises pouring capital into the Vietnamese retail sector. Besides, mobile phone sales are currently having a great development potential because of the increasing demand in Vietnam. Thus, VinaCapital decided to invest in FPT Retail, a leading Vietnamese retailer.

Vu Huu Dien, investment director of Dragon Capital, stated, “Vietnam is considered one of the most attractive retail markets on the world with a population of nearly 100 million and retail revenue of more than $110 billion. With the professionalism of FPT Retail’s management team as well as the leadership’s experience in running the operations, FPT Retail will definitely go far in the retail sector.”

This deal is a part of FPT Corporation’s plan to divest from FPT Retail, reducing its stakes from 85 to less than 50 per cent.

Accordingly, FPT will first sell 30 per cent of its stakes to financial institutions. Then, the corporation will divest another 10 per cent to other investors via securities firms.

FPT is expected to complete its divestment in 2017. FPT Retail will submit its IPO plan at the 2018 general shareholders' meeting.

FPT decided to let go of its FPT Retail due to its small contribution in terms of profit. The company’s first two years of operation in 2012 and 2013 resulted in losses. In 2016, it earned VND259 billion ($11.3 million) in pre-tax profit, making up 8.59 per cent of FPT’s profit.

Besides, it has difficulties in competing with the The Gioi Di Dong chain. The rival is currently the largest technology product distributor with a 35 per cent market share in mobile phones and related accessories, tablets, and laptops.

As of late August 2016, FPT Shop owned 447 stores however, the figure is only one-third of the number of The Gioi Di dong stores.

Established in 1988, FPT operates in four key sectors, including technology, telecommunications, technology product distribution and retail, and education.

It is not the first time that FPT decides to divest from a subsidiary. In 2016, FPT planned to decrease its holdings in FPT Trading due to its declining revenue figures.

FPT’s divestment of both subsidiaries is expected to be completed by the end of this year. The proceeds from the sales will be used to invest in the corporation’s key business sectors, software and telecommunications, through M&A deals in line with FPT’s long-term business strategy.

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By Kim Oanh