Vietnam’s shrimp king courts foreign investors to expand

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Workers process shrimp at a factory of Minh Phu Seafood Corp. in Vietnam's Mekong Delta. Workers process shrimp at a factory of Minh Phu Seafood Corp. in Vietnam's Mekong Delta.

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Minh Phu Seafood Corp., which sells black tiger shrimp to Costco Wholesale Corp. and Wal-Mart Stores Inc., will seek to sell half of itself to foreign strategic investors to help fund overseas expansion.
Vietnam’s largest seafood exporter by value aims to complete the stake sales this year after it gets approval to delist from the Ho Chi Minh City Stock Exchange this quarter, Chief Executive Officer Le Van Quang said in an interview. The company forecasts net income will jump 55 percent to 1.416 trillion dong ($66 million) this year, with sales reaching $1 billion, mainly from exports, he said.
“We’re looking for strategic foreign investors to help maximize our advantages and potential as our goal is to become a global shrimp company by 2020,” Quang, dubbed the “king of shrimp” by local media, said in an interview Jan. 24 in the Mekong delta province of Hau Giang.
Vietnam is considering proposals to raise the foreign-ownership limits of listed companies. Vietnamese companies are increasingly in need of foreign strategic investors for capital and expertise to expand internationally.
Under current rules, foreign investors can hold a maximum 49 percent of a listed company’s stakes. A draft measure proposes that foreign investors be allowed to make “unlimited” investments in non-voting shares of public companies.
Foreign investors
“If we stay on the Ho Chi Minh Stock Exchange, we can’t raise enough target capital,” said Quang, who plans to raise the company’s registered capital 20 percent to 840 billion dong.
Minh Phu dropped 0.9 percent to 109,000 dong a share in Ho Chi Minh City trading on Wednesday, Jan. 28. Its share price rose more than four-fold last year as the company bought back shares, giving it a market capitalization of 7.5 trillion dong now, according to data compiled by Bloomberg.
A dozen foreign investors from the U.S, Japan and Canada have expressed interest in the stake sales, Quang said at his office at company subsidiary Minh Phu Hau Giang Seafood Processing Joint-Stock Company. Mitsui & Co. Ltd. holds a 31 percent stake in the Mekong delta-based subsidiary.
Minh Phu will choose one or two partners this year, Quang said. France-based Artemis’s Red River Holding owns a 9.47 percent stake and Vietnam Investment Fund holds 7.38 percent, said Quang. The company failed to secure a partnership deal with CP Group, Thailand’s largest shrimp exporter, in 2012, he said.
Quang said he and his family want to drop their stake holdings to no less than 35 percent from 79 percent currently.
Vietnam seafood
Minh Phu’s sales and profit will grow 15 percent to 20 percent annually over the next five years, Quang said. The company has helped propel Vietnam to become one of the fastest-growing seafood exporters in the world, with the national industry’s shipments rising 18 percent to $7.9 billion in 2014. Vietnam’s shrimp exports climbed 25 percent to a record $4.1 billion last year.
Shrimp prices hit a record last year due to a lack of global supply when diseases affected shrimp from Thailand, said Dinh Duc Minh, senior analyst at Saigon Securities Inc.
“If Thailand resolves shrimp diseases and the supply increases again, the shrimp prices will drop,” Minh said. “In that case, Minh Phu and other shrimp companies in Vietnam can’t earn profits as high as in 2014.”
The company’s exports to more than 60 countries jumped 41 percent to $730 million last year, Quang said. The United States is its largest market, comprising more than a third of last year’s exports, followed by Japan and Europe.
Quang wants to find strategic investors who can help the company expand its production and market overseas, he said. The company is working with Edmond de Rothschild Suisse SA to find investors, he said.
Quang said his company plans to build shrimp processing companies and distribution units in India, Indonesia and the Philippines in the next five years. The company, which runs a distribution unit in California, plans to build a 40,000-ton shrimp processing plant in Ca Mau province this year and another with the same capacity in Hau Giang province in the next three years.
“My goal is to produce shrimp for everyone’s meal,” said Quang, “Shrimp isn’t food only for the rich any more.”

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