Customers shop at a WinMart store belonging to Masan Group. — Photo courtesy of Masan Group

Transaction terms remain the same as per the initial agreement in October 2023.

The proceeds will be used to strengthen the company’s financial position and deleverage its balance sheet.

The transaction represents an equity investment in the form of Convertible Dividend Preference Share (CDPS), which will be issued at a price of VNĐ85,000 per share. These CDPS can later be converted into ordinary shares at a 1:1 ratio.

In addition to the normal dividends payable (if any) to the company’s shareholders, the CDPS has no preference dividend for the first five years. Starting from the sixth anniversary onwards, it will have a 10 per cent preference dividend at the par value of each outstanding CDPS per annum.

On the 10th anniversary of the issuance, the outstanding CDPS will be mandatorily converted into ordinary shares of Masan Group.

WinMart Supermarket caters to a diverse range of consumer needs with its wide selection of products. — Photo courtesy of Masan Group

There are no hedging structures or stock borrow of MSN shares as part of the equity investment that would result in MSN shares needing to be sold in the open market at the date of the issuance. Bain Capital’s interests are fully aligned with current MSN shareholders.

Despite recent market volatility, the upsizing of the transaction by Bain Capital is a robust validation of Masan’s long-term strategy and near-term outlook, fueled by the operating momentum in Q3, 2023.

The combined operating profits (EBIT or earnings before interest and taxes) of Masan’s consumer-retail businesses, including Masan Consumer Holdings, WinCommerce, Masan MEATLife, and Phúc Long Heritage, recorded a remarkable year-on-year rise. Specifically, during the first nine months and in the third quarter of the year, these businesses experienced growth rates of 45.5% and 47.3%, respectively.

Free cash flow consistently improved, reaching over VNĐ2.2 trillion ($90.45 million) in Q3, 2023 compared to VNĐ125 billion ($5.13 million) in Q3, 2022, driven by more effective working capital management.

According to Kantar Worldpanel, in Q3, 2023, FMCG markets only recorded 6 per cent year-on-year growth in four urban key cities in Việt Nam and 7 per cent y-o-y growth in rural areas. Meanwhile, on a like-for-like (LFL) basis, Masan Consumer Holdings’ revenue grew 9 per cent y-o-y and EBITDA grew 20 per cent y-o-y in Q3, 2023. Masan Consumer Holdings’ operating profit is expected to continue its double-digit growth in Q4, 2023.

Masan’s MEATDeli chilled meat product. — Photo courtesy of Masan Group

In November 2023, after a period of format innovations and efforts to enhance operational efficiencies, WinCommerce started to deliver improvement in daily store revenue with y-o-y LFL growth approaching positive areas versus a decline of 10 per cent y-o-y in Q1, 2023. The current momentum gives management confidence in positive LFL growth for the month of December, which will support the overall profitability profile of WinCommerce.

Jefferies Singapore Limited and UBS AG Singapore Branch acted as the financial advisors to Masan Group. The transaction is subject to customary corporate and regulatory approvals.

Masan expects the transaction to close in the next few months and continues to explore other strategic alternatives for equity capital, which may include diluting its interest in non-core businesses, to strengthen its liquidity profile and achieve a sustainable Net Debt to EBITDA ratio below 3.5x on a steady-state basis.