$135 million deal kicks off new 2019 M&A season

12/02/2019 01:01:54

VietNamNet Bridge - More Vietnamese enterprises are buying overseas companies in an attempt to enter foreign markets.

Last update 15:27 | 11/02/2019

Consolidated Pastoral Company (CPC) has confirmed that it has sold three cattle farms in Australia’s Northern Territory and Western Australia to CAIT, a company from Vietnam.

The $135 million deal still needs approval from the agency in charge of foreign investment management. Troy Setter, CEO of CPC, said CPC’s managers and workers are looking forward to joining CAIT to continue running the farms and managing land.

CAIT is a subsidiary of a food group in northern Vietnam. The investor said that it would continue pouring money into many different types of assets and diversify investments, expecting to develop high-value cultivation projects and non-cattle farm fields.

The group has set foot in new business sectors, including education, health care and herbal medicine, while it continues making fresh milk.

The current consumption level in Vietnam is 17 liters per head per annum, much lower than Thailand’s 35 liters, and Singapore’s 45 liters. This means that the dairy market is still large enough for investors with high demand, especially for organic food products.

The M&A deal is hoped to help CAIT settle a big problem – the lack of input materials. CAIT would own a large land fund of 740,0000 hectares, 52,000 cows and machines.

In previous years, all three farms in Australia exported tens of thousand of cows to Southeast Asia, including Vietnam.

The current consumption level in Vietnam is 17 liters per head per annum, much lower than Thailand’s 35 liters, and Singapore’s 45 liters. This means that the dairy market is still large enough for investors with high demand, especially for organic food products.

Opportunities for dairy producers are not only seen in Vietnam, but in other Southeast Asian markets as well, especially Indonesia, the Philippines and Cambodia.

The three markets, with 400 million consumers, are growing by 15-25 percent per annum because of the lack of high-quality products, and together with Myanmar, with 54 million consumers, are believed to have five times more potential than the Vietnamese market.

CAIT’s deal is not the first investment by Vietnamese agriculture and food groups in Australia.

In 2016, a Vietnamese investor spent $13.6 million to buy a farm in North Australia. Prior to that, some private investors spent several million dollars to acquire small farms in the country.

Vinamilk, the nation’s leading dairy producer, is running a milk processing plant, Miraka, in New Zealand, which has similar climate conditions to Australia’s.

In 2018, Vietnamese investors registered outward investment value of $432.1 million.

Both Australia and Vietnam have become members of CPTPP, which makes it easier to invest in the country.

Vietnamese have also poured money into real estate. In 2018, a Vietnamese investor spent $8.7 million to acquire the Thaiky Center.