A consortium co-led by Alibaba and Hong Kong’s Baring Private Equity Asia has agreed to invest $400 million into TheCrownX, the consumer retail arm of Vietnamese conglomerate Masan Group.
The transaction will give the Alibaba-led consortium a 5.5% stake in The CrownX, which is valued at $6.9 billion.
Masan formed The CrownX last year, bringing together its Masan Consumer unit — which sells a number of food and beverage brands — and VinCommerce, the grocery business it acquired from VinGroup in 2019 which includes supermarket chain VinMart and VinMart+ convenience stores.
The Alibaba-led deal follows the announcement last month of a $410 million investment into VinCommerce by South Korean conglomerate SK Group — which includes semiconductor maker SK Hynix and wireless communications firm SK Telecom — in return for a 16.3% stake. SK Group is also a shareholder in Masan.
VinCommerce operates about 2,300 outlets across Vietnam, commanding a 50% share of the country’s grocery retail market, according to Masan.
As part of the Alibaba-led funding deal, VinCommerce will partner with Singapore-based e-commerce company Lazada — which is majority-owned by the Chinese tech giant — to cooperate on building an e-grocery service in Vietnam.
The strategic agreement will see VinCommerce become the “preferred grocery retailer” on Lazada’s Vietnam site, with the pair sharing knowhow, data, and analytics “to develop grocery as a key online category.” VinCommerce physical outlets will also become pick-up points for online orders made through the platform, while both parties will work together on enhancing their logistics capabilities to improve service levels and reduce costs.
Danny Le, CEO at Masan Group, said in a statement that the strategic investment and partnership with Lazada will “accelerate our ability to achieve our goal of transforming The CrownX into a one-stop shop to serve consumers’ everyday needs, whether offline or online.”
“Our immediate priority is to modernize Vietnam’s grocery market and develop an unparalleled consumer proposition from assortment to shopping experience. I strongly believe that this partnership will reduce our learning curve and enable us to reach our endgame more efficiently and effectively,” he added.
Baring managing director Janice Leow said that the investment co-led by her firm can “supercharge The CrownX’s growth in a nascent retail market and create the largest consumer ecosystem in Vietnam.”
“As a long-term investor in the country, we think Vietnam has a long runway for growth supported by strong macroeconomic tailwinds and attractive demographics,” she continued. “The CrownX also has tremendous digital potential, particularly in e-commerce and data analytics.”
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Mitchell Kim, an analyst who publishes on equity insights platform Smartkarma, suggests that Alibaba’s backing of The CrownX has echoes of its earlier investments in Lazada, with the Chinese tech company leveraging the Singapore-based platform to gradually build a share in Southeast Asia’s fast-growing online shopping market.
“Online shopping as a percentage of total retail consumption is small [in Southeast Asia],” he says.
“Online groceries are the next growth area for these e-commerce platforms. Alibaba has strong advantages in the Southeast Asia expansion given Lazada’s footprint and its own online grocery business experience over the last few years. As for the Vietnam market, Alibaba is taking a similar approach.”
Kim anticipates Alibaba upping its stake in The CrownX if its online grocery business proves to be successful, pointing to other examples where the Chinese company initially made minority investments before acquiring controling stakes.
Alibaba fully acquired shopping mall and department store operator InTime for $2.6 billion in 2017, building on an earlier stake it had purchased in the company. It paid $3.6 billion to wholly acquire hypermarket chain Sun Art last October after a similar history of making smaller investments.
In April 2016, the Chinese tech company purchased a controling stake in Lazada — which itself acquired Singaporean e-grocer RedMart for an undisclosed sum later that year — after earlier investments in the company.
Masan said it is in “advanced discussions” to secure up to $400 million in further external investment for The CrownX by the end of the year.
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