28-2-2024 (BEIJING) China’s CDH Investments is in advanced negotiations to acquire a minority stake in Vietnam’s grocery chain Bach Hoa Xanh (BHX) from retailer Mobile World, in a deal potentially valuing the business at up to US$1.7 billion, according to two sources with direct knowledge.
CDH, a major Chinese alternative investment firm and a former investor in Mobile World, has emerged as the leading contender to purchase a stake of approximately 5 to 10 per cent, outbidding other rivals, the sources revealed. “CDH is looking to buy between 5 per cent to 10 per cent stake,” said one source, cautioning that discussions were ongoing and a deal was not guaranteed.
The second source suggested that a deal “could be struck as early as next month if negotiations were successful”.
Both sources opted to remain anonymous as the discussions were private. CDH and Mobile World, Vietnam’s largest retail group by market value, declined to comment on the matter when approached by Reuters. If the deal goes through, it would highlight the global investor interest in Vietnam’s expanding business sectors, particularly in the consumer industry, despite challenges faced by the country’s property sector due to an anti-corruption crackdown.
BHX’s parent company, Mobile World, initially announced plans for a minority stake sale in the grocery chain in 2022 but postponed it due to unfavourable market conditions. The sale process was revived last year and attracted interest from Singapore sovereign wealth fund GIC and companies from Thailand, according to Reuters.
CDH, founded in 2002 by Chairman Wu Shangzhi, has grown to become one of China’s earliest private equity firms. Initially focused on traditional industries such as consumption and manufacturing, it now manages over US$27 billion in assets and has played a significant role in major deals, including investments in WH Group, the world’s largest pork supplier, and Midea Group, a leading appliance maker.
According to one source, CDH had divested its investment in Mobile World nearly a decade ago to capitalize on its returns. BHX, established in 2015, operates more than 1,700 stores in Vietnam’s southern and south-central provinces. The company’s managing director had informed investors last year that profitability was anticipated from the current year onward.
