Masan Group signed a strategic partnership agreement with SK Group on September 19. The agreement will enable the two parties to draw on each other’s strengths to accelerate Masan’s and SK’s respective growth strategies. The corporate groups aim to jointly pursue transformational business opportunities in Vietnam and to synergise existing business units.
SK Group is one of the largest corporate groups in South Korea, with business across energy, chemicals, telecommunications, semiconductors, logistics, and services. SK Group operates globally across more than 40 countries and had a combined revenue of $141 billion as of the end of 2017.
SK’s investment of approximately $470 million will entirely comprise of new capital and SK will own 9.5 per cent of Masan Group. The company plans to utilise the proceeds to fund its future growth initiatives, as well as to strengthen its balance sheet.
With a strong balance sheet, Masan will add up to $50 million of net earnings per annum for the full year of 2019, while gross debt to EBITDA is expected to decrease to 2.5x by the end of 2018. Management expects core net after-tax profit to jump by at least 50 per cent in the fiscal year of 2018 and forecast similar base case earnings growth momentum for the 2019 fiscal year as each of its core business continues to deliver on its growth plans.
Masan plans to consolidate cash at the group level by up-streaming free cash flows from its subsidiaries to build a strategic investment war chest and/or return capital to shareholders. MSN does not intend to issue additional shares to investors over the next three years.