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|FPT will divest FPT Retail and FPT Trading due to decreasing revenue and profit figures|
According to newswire Cafef, on September 12, Synnex Technology International Corporation (Synnex) and FPT signed a co-operation agreement to develop FPT Trading. Accordingly, Synnex will become the strategic investor of FPT Trading via acquiring a 47 per cent stake in this company.
With the financial potential and experience of Synnex in distribution technology, telecommunications, and electronic component products, the investor is expected to help FPT Trading stop the consecutive decreases in revenue and expand its business network and improve its competitive capacity.
Earlier in August, Dragon Capital and VinaCapital completed the purchase of a 30 per cent stake, equaling six million shares, in FPT Retail, aiming to plunge deeper into the retail sector in general and the mobile retail sector in particular.
The total value of the deal has yet to be disclosed. However, VinaCapital announced that its subsidiary Vietnam Opportunity Fund Ltd. poured $11 million into the deal.
After completing the agreement with Dragon Capital and VinaCapital, FPT plans to put an additional 10 per cent in FPT Retail on sale and expects to list the subsidiary on the Ho Chi Minh City Stock Exchange in 2018.
In 2016, FPT decided to let go of FPT Retail and FPT Trading due to declining revenues in the sector.
Notably, FPT Retail’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, only one-third of the number of The Gioi Di dong stores.
Regarding FPT Trading, the company used to be considered FPT’s goose that lays golden eggs, however, it saw decreasing revenue since it lost the position of the sole distributor of Iphone products as of September 2015.
In addition, Microsoft's suspension of launching new models contributed to this plunge. The bleak trading results still persist. In 2016, it earned VND30 billion in pre-tax profit, decreasing 90 per cent on-year.
After divesting from FPT Trading and FPT Retail, FPT will remain the largest shareholder in these companies with 48 per cent in FPT Trading and 45 per cent in FPT Retail. The proceeds from the sales will be used to invest in the corporation’s key business sectors, including software and telecommunications, through M&A deals in line with FPT’s long-term business strategy.
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