The recent forays in Vietnam include the establishment of three Robins Department Stores, the acquisition of a 49 per cent stake at Vietnam’s largest electronics retailer Nguyen Kim, the takeover of fashion e-commerce site Zalora Vietnam from German group Rocket Internet, and a $1.1 billion buyout of Big C Vietnam.
Vietnam was now shaping up as a second home for Central, Prin Chirathivat, deputy group CEO, reportedly said.
He realised it was time to reap profit from the businesses in the neighbouring country, adding that the depreciation of fixed assets was enough to put pressure on profitability, despite the positive cash flow, according to a report on The Nation.
However, according to the executive, Central Group will not want to miss any interesting inorganic growth opportunities in Vietnam even as it has decided to slow down the buying pace.
Its biggest equity investment in Vietnam was the $1.1 billion deal to own over 30 Big C Vietnam supermarkets, which was reported to be accommodated by the sale of Big C Thailand unit to rival TCC Holding and its subsidiary Berli Jucker. But the 50 billion baht realisation from offloading the remaining 25 per cent in Big C Thailand will be used for other purposes, while Central Group secured a bridge loan from Bangkok Bank to finance the Vietnam deal, according to the Bangkok Post.
Meanwhile, it will use Zalora to strengthen the channels of its local partner Nguyen Kim and Central Marketing Group’s unit in Robins, the media reports said.
Despite the halt in further acquisitions, the Thai group still considers Vietnam as a very important market, buoyed by a growing economy and high purchasing power.
“In Indonesia, we don’t have an opportunity to acquire retail businesses because there are no sellers unlike in Vietnam. Our expansion in Indonesia is slower than in Vietnam,” The Nation cited Prin as he compared Vietnam with Southeast Asia’s largest market.
However, he also revealed the group’s plan to have five more department stores in Jakarta and Surabaya by 2017, as the retailer is currently operating only one store in the capital city.
In Thailand, Central Group no longer has ownership in Big C Supercentre but has also acquired Zalora business in the country.