SEOUL -- South Korea's SK Group will invest 1.18 trillion won ($991.8 million) in Vietnamese conglomerate Vingroup, SK announced on Thursday.
The South Korean chaebol aims to expand its operations in Vietnam by tying up with Vingroup in telecommunications and other fields. SK’s Vietnam operations are weak compared to competitors Samsung Group and LG Group. It hopes to change that by working with local companies that are already strong on the ground.
SK will become Vingroup’s second largest shareholder by the end of the year, holding 6.1% of shares. SK is expected to send an executive to Vingroup.
The two conglomerates will work to establish telecom infrastructure, and focus on the privatization of Vietnam’s state-owned enterprises, said an SK spokesperson. In addition to considering jointly running M&As, the two companies will work together as the next generation of high-speed 5G networks comes online.
Among South Korean companies, Samsung Electronics operates a major smartphone factory in Vietnam, and LG Electronics has a factory that makes washing machines and other home electronics there.
Apart from oil exploration activities, SK does not have any notable businesses in Vietnam. But the company has viewed Vietnam as increasingly important since Chairman Chey Tae-won met with Vietnamese Prime Minister Nguyen Xuan Phuc in November 2017.
Vingroup is active in a wide range of businesses, including real estate development, logistics, and smartphones.
Vingroup's revenue for the first quarter of 2019 was about 1.1 trillion won, according to SK. That is more than 40% of its yearly average for 2016 through 2018.