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Jardine Matheson appoints first board member to Vinamilk

British group is latest foreign investor to gain board seat at Vietnam state dairy

Vinamilk products in a supermarket in Hanoi, Vietnam. (Photo by Takaki Kasihwabara)

HO CHI MINH CITY -- Jardine Matheson, a British conglomerate based in Singapore, has appointed its first board member at state-owned Vietnam Dairy Products, or Vinamilk, after winning approval at the company's annual general meeting. Jardines' representative was accepted after the conglomerate acquired a stake of more than 10% in Vinamilk ahead of the meeting.   

During the AGM on Saturday in Ho Chi Minh City, Vinamilk's shareholders approved Jardines' proposal to increase the members of the management board to 11 from nine. Alain Xavier Cany, country chairman of Jardine Matheson (Vietnam), is taking up one of the new seats, while Vinamilk is searching for a suitable member to fill the other.

On Nov. 10, Jardines won the bidding in a state auction to divest a 3.3% stake in Vinamilk for 8.9 trillion dong ($394 million) via its local wholly-owned subsidiary. On Nov. 13, the British conglomerate said it had a total stake of 5.53% in Vinamilk, through state sales and market purchases, worth $616.6 million. On Nov. 16, Jardines said it was buying more than 48 million additional shares, increasing its holding to 8.9%, and bringing its total investment in Vinamilk to more than $1 billion.

Then, on Nov. 17, Jardines announced it was buying a further stake of about 1.1%, increasing its ownership at Vinamilk to approximately 10% and thus clearing the threshold to be able to appoint a representative to a Vietnamese company. 

All the purchases have been made by Platinum Victory, the wholly-owned local subsidiary.

"Jardines is ready to support Vinamilk to grow in the markets [in which] the company has [a] strong presence," Cany told the Nikkei Asian Review on Saturday. He said Vinamilk could leverage Jardines' existing businesses in Asia, which include more than 5,000 outlets of Dairy Farm, a Hong Kong-based retail company with a presence in China, Indonesia and Thailand.

Vinamilk Chairwoman Le Thi Bang Tam told shareholders at the AGM that the addition of Cany to the board would help Vinamilk grow as a multinational.

Vinamilk Chief Executive Officer Mai Kieu Lien told the Nikkei Asian Review the dairy maker had already started co-operating with Jardines to increase exports to Indonesia and Thailand. While exports to China face some difficulties due to regulation on dairy products, she expects any issues will be solved by the end of this year. "Once obstacles are removed, China will be a huge potential market for Vinamilk, supported by Jardines' network in the country," said Cany.

Foreign investors are beefing up their interests in Vietnam's food and beverage sector on the back of the country's growing domestic market, as well as increased opportunities to grow a regional business across the Association of Southeast Asian Nations.

Thailand's Thai Beverage acquired a majority stake in state-owned brewer Saigon Beer Alcohol Beverage (Sabeco) for $4.8 billion in December. The Thai company has proposed three representatives to Sabeco's board. ThaiBev filed a complaint with the Vietnamese government last week, accusing Sabeco of not accepting its proposed board members, according to government sources in Hanoi. ThaiBev aims to win shareholders' final approval at an extraordinary shareholders' meeting scheduled on April 23.

Such big investors want seats in Vietnamese boardrooms in order to have more say on the business operations of the companies they are invested in. "Having poured big funds into the leading companies in Vietnam, these investors have rights and duties to make sure those companies are on the right track," said Vietnamese economic expert Le Dang Doanh.  

Another major foreign investor of Vinamilk, Fraser & Neave, a food and beverage conglomerate based in Singapore, with a 19.95% stake, is also moving to increase its clout over the dairy group.

Fraser & Neave appointed two representatives to the Vinamilk board over 2016 and 2017. One of these, Lee Meng Tat, confirmed to Nikkei on the sidelines of the Saturday AGM that F&N "is still buying Vinamilk shares" on the stock market and through government divestments.

Meanwhile, Vietnam's State Capital Investment Corporation, a state-owned holding company and national wealth fund, which holds a 36% stake in Vinamilk, said any further divestments in 2018 were pending decision by the government.

Jardines is primarily listed on the Singapore Exchange and the majority of its interests are in Asia. Subsidiaries include Jardine Pacific, Jardine Motors, Dairy Farm, Mandarin Oriental Hotel Group and Astra International, an Indonesia based conglomerate.

In Vietnam, Jardines has acquired major shares in leading companies, including Truong Hai Auto, Refrigeration Electrical Engineering Corporation, and has also invested in a range of sectors including real estate, banking and retail. Cany said Jardines would enhance its investment and business in Vietnam by buying shares in state-owned companies, taking advantage of the government's ongoing divestment plan. 

(Nikkei)

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