Vietnam: Dragon Capital buys minority share in Sabeco at discounted price

Dragon Capital, a Vietnam-focused investment company, has purchased through seven of its investment funds 15.3 million shares of Saigon Beer Alcohol and Beverage (Sabeco) amounting to about 2.3% of the share capital from Singapore-based Nogard Pte. Together with the 3.5 million shares, which Dragon Capital already owned before, the investment company now owns 18.8 million shares or about 2.9% of Sabeco’s share capital. This makes Dragon Capital the owner with the largest share of the 10.4% free float in Vietnam’s largest beer company.

According to Vietnam Beer Alcohol and Beverage Association (VBA) Sabeco’s production in 2017 amounted to 17.7 million hectoliters of beer alone, an increase of 6.6% in comparison to 2016, while the second largest domestic brewer, Hanoi Alcohol Beer and Beverage (Habeco), which is also up for sale, (inside.beer, 10.1.2018) made 6.6 million hectoliters, down 6.5%.

Last December nearly 54% of Sabeco’s shares were sold in a public auction to Vietnam Beverage, a local unit of ThaiBev for US$4.89 billion. (inside.beer, 18.12.2017)

At that time ThaiBev paid a strategic price of US$14.05 per share, whereas Sabeco’s current share price is only at US$9.4, one third less than in December last year. Although Dragon’s purchase price was not disclosed it is believed that it was close to the current market price, which would put the transaction value at VND3.27 trillion (US$143.8 million).

Besides ThaiBev’s 54% majority stake, Vietnam’s Ministry of Industry and Trade still holds about 35.6% in Sabeco and the remaining 10.4% of the company's shares represent free float, with Dragon Capital being the largest single shareholder.

Dragon Capital was established in 1994, when US President Clinton lifted the 19-year trade embargo against Vietnam, in place since the end of the Vietnam War. It is Vietnam’s longest established independent asset manager with over US$3.14bn (as of 31 December 2017 – unaudited) in listed equity, clean-tech, fixed income and real estate for international pension and sovereign wealth funds and endowments. The company has two representative offices in Vietnam in Ho Chi Minh City and Hanoi and one representative office in Bangkok, Thailand, as well as subsidiaries in the UK and HongKong.

Dragon Capital is headed by its Executive Chairman Dominic Scriven, a UK born, who graduated from Exeter University with a degree in Law and Sociology and founded Dragon Capital after he studied at Hanoi General University for two years.

Dragon Capital executed the deal through seven of its funds including Vietnam Enterprise Investments Limited (VEIL), which bought 8.1 million share followed by Hanoi Investments Holdings Limited with 2.8 million shares and Norges Bank with over 2 million shares. Dragon Capital’s other funds involved were Aquila SPC Ltd., KB Vietnam Focus Balanced Fund, DC Developing Markets Strategies Public Limited Company, and Viola Ltd.

 

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