VinaCapital, one of the two largest asset management company in Vietnam besides Dragon Capital, has agreed to terminate a controversial investment in Ba Huan JSC, a leading poultry firm in the country, after the latter stated that the former wanted to conduct a hostile acquisition.
The two sides have started to prepared necessary legal papers to end this deal early, VinaCapital said in a statement late on August 9, noting that the firm is open to striking a partnership with Ba Huan in the future provided more favorable conditions.
In February, the Vietnam-focused fund management firm invested US$32.5 million in the poultry company for a significant minority stake. However, due to different interpretations of key terms, VinaCapital said it would not be able to play a constructive role in helping Ba Huan.
As part of the agreement, all of the capital invested in Ba Huan by VinaCapital will be returned.
Don Lam, founder and CEO of VinaCapital, told VnExpress that this was the first failed deal and that was normal for a company that has made over 100 investments during more than a decade of operations in Vietnam.
VinaCapital will continue to seek opportunities to invest in unlisted, private and family-run companies in Vietnam to support the business community in the country, Don Lam said.
In early July, Ba Huan asked for the prime minister's intervention in terminating its partnership with VinaCapital, citing differences between the English and Vietnamese versions of the agreement, which 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.
However, VinaCapital said the contract drafted in English along with other important documents were translated to Vietnamese accurately. The negotiation process lasted over six months and Ba Huan sought advice from consultants and understood clearly their obligations during that period.
The asset management firm also emphasized that it had no intention to take over Ba Huan and this was not part of its business strategy.
