Tuesday, 18 Jun 2019

VinaCapital officially ends investment in poultry firm Ba Huan

Updated at Tuesday, 09 Oct 2018, 12:31
The Hanoitimes - This results in an increase in the stake holding of domestic shareholders in Ba Huan from 66.2% to 83.6%, of which Ba Huan`s Director Pham Thi Huan owns 64%.
Ba Huan JSC, the country's leading pasteurized eggs and poultry meat producer, has decreased its charter capital from VND280 billion (US$12 million) to VND222 billion (US$9.53 million), effectively ending the involvement of VinaCapital, one of the two largest asset management firms in Vietnam, with the company. 
Illustrative photo.
Illustrative photo.
In the company's list of shareholders, Hawke Investment Pte (Singapore) has reduced its stake to 16.39%, which is equivalent to the amount the Singaporean company had owned at Ba Huan before VinaCapital invested US$32.5 million in Ba Huan through Hawke Investment in February. 

This results in an increase in the stake holding of domestic shareholders from 66.2% to 83.6%, of which Ba Huan's Director Pham Thi Huan owns 64%.

In Feburary, VinaCapital`s flagship fund Vietnam Opportunity Fund (VOF) invested US$32.5 million to acquire a significant minority stake in Ba Huan. 

However, in early July, Ba Huan sought Prime Minister Nguyen Xuan Phuc's intervention in terminating its partnership with VinaCapital. The firm said there were differences between the English and Vietnamese versions of the agreement and the terms were not what the two parties had agreed initially. 

Among those terms, the poultry firm noted that VinaCapital included an internal rate of return (IRR) of 22% per year, three times higher than current interest rate at banks. In the event of the IRR not being met, Ba Huan will be fined or required to return the investment capital, along with a 22% interest, or must transfer to VinaCapital at least 51% stake in the company. 

It also alleged that the partnership restricts it from engaging in any other business except chicken and eggs.

In an announcement, VinaCapital informed that due to misunderstandings, the two parties are in negotiation to end the partnership in compliance with the law and based on mutual interests. 

With regard to the deal, VinaCapital stressed the terms that were agreed to by both parties are aligned with market practices and are typical of the many mutually successful transactions that have completed in the past.

Moreover, the terms also included a number of conditions intended to protect investor's interests. These conditions are only applicable if the company cannot achieve the results forecast by management. In addition, the fund agreed to invest at a valuation significantly higher than the market valuation from a price-to-earnings basis.
Ngoc Thuy
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