vingroup unlocks new era of growth by divesting vincom retail stake 2544


Vingroup Unlocks New Era of Growth by Divesting Vincom Retail Stake


Lauren Miller

March 18, 2024 - 08:14 am


Vingroup Executes Major Stake Sale in Vincom Retail

In a significant move within Vietnam's corporate sector, Vingroup JSC, the country's most illustrious private conglomerate, has finalized an agreement to sell a substantial share of its investment in Vincom Retail. This strategic divestment marks a pivotal step for Vingroup as it zeroes in on cementing its status within high-potential growth areas.

Landmark Deal Sealed

Vingroup has reportedly agreed to part with a 41.5% stake in Vincom Retail, according to a knowledgeable source privy to the deal's details. The divestment will see Vingroup's investment arm, SDI Trading Development and Investment Ltd., which holds a commanding 99% in Sado Trading Commercial JSC, relinquish its approximate 41.5% interest in Vincom Retail. Post-transaction, Vingroup's remaining interest in Vincom Retail will be approximately 18.8%, as indicated by the source.

It’s essential to highlight that this information was corroborated through an official communication from Vingroup. Confirming the transaction via an emailed statement, Vingroup outlined that the deal’s completion is slated for somewhere between March and the third quarter of the year. However, specifics pertaining to the transaction, including its monetary value and the identity of the investor, were not shared.

A Strategic Focus on Growth

The proposition of this divestment aligns with a broader strategic vision embraced by the conglomerate. "This is the time to focus all resources to strongly develop Vingroup and key brands with high growth potential," articulated Nguyen Viet Quang, the vice-chairman of Vingroup, underscoring the intentional pivot towards areas believed to offer substantial growth trajectories.

Market Response to Vingroup’s Move

Following the announcement, there was an observable bullish sentiment towards Vincom Retail in the market. The company's stock surged to a commendable 6.8% increase on Monday, marking its most robust performance almost a month. Year-to-date, the surge in Vincom Retail’s stock price stands at a notable 16%, outperforming the benchmark VN Index's 9.6% incline. Concurrently, Vingroup’s own shares enjoyed a lift, ascending by as much as 2.5%.

Vincom Retail's Stellar Performance

The rationale supporting this divestment becomes clearer when examining Vincom Retail's financial health. The past year has been one of robust growth, with the retailer seeing a striking 59% jump in its after-tax profits, believed to be in the vicinity of 4.4 trillion dong ($178 million). Moreover, the company's revenue has also witnessed a healthy uptick, scaling up by 33% to reach around 9.8 trillion dong.

Eyeing a Global Electric Vehicle Foothold

Vingroup's decision to reduce its stake in Vincom Retail, which is reputed for operating and crafting shopping malls, is seemingly tied to the conglomerate's ambitious venture into the global electric vehicle market with its subsidiary, VinFast. VinFast is notably laying down foundations for a substantial $2 billion manufacturing complex in North Carolina and has recently marked the onset of construction at its EV manufacturing facility in Tamil Nadu, India.

Read more: Vietnam EV Maker VinFast’s Losses Widen as Costs Surge

Real Estate Titan Realigns Focus

Vingroup's overarching strategy has been witnessing a transition since 2018, with an express focus now placed on certain core sectors, including technology and manufacturing. Such strategic shifts highlight the company's adaptability and forward-thinking approach in the fast-evolving corporate landscape.

Strategic Collaborations and Business Evolutions

A testament to Vingroup's dynamic strategy was the 2019 merger announcement between Vingroup and Masan Group. The consolidation encompassed Vingroup's VinCommerce—a network of supermarkets and convenience stores—and its agriculture division VinEco with Masan Consumer Corp. This paved the way for a newly minted entity under Masan's operational helm.

Adding another layer to the conglomerate's strategic shifts, Vingroup, in a surprising move in 2021, decided to terminate operations of its electronics devices division, VinSmart, only a few months following the commencement of smartphone exports to the United States.

The narrative of Vingroup's stake sale in Vincom Retail unfolds within the larger context of the company’s strategic reorientation towards nascent and promising industries. As it adjusts its sails to catch the wind of innovation and progress, this paradigm shift could potentially carve new avenues of growth and expansion for one of Vietnam's corporate goliaths.

End of News Article

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