GUERNSEY: VinaCapital Vietnam Opportunity Fund (VOF), the flagship fund of VinaCapital, has made a private equity investment in Ngoc Nghia Industry-Services-Trading Joint Stock Company, a pioneer and leading manufacturer of PET (polyethylene terephthalate) packaging in Vietnam.
VinaCapital will lead a consortium to invest $21.4 million in Ngoc Nghia, of which VOF will invest $17.0 million for an undisclosed stake and will receive two seats on the Board.
Ngoc Nghia has the largest plastic packaging production capacity in Vietnam, with an annual output of 3.7 billion preforms, bottles and closures manufactured per year at three production sites. Management estimates that in terms of volume, Ngoc Nghia accounts for the largest market share of PET packaging.
Based in Ho Chi Minh City, Ngoc Nghia has been growing its revenue base at a compound annual growth rate (CAGR) of 15.3% between 2016 and 2018, and in 2019, expects to deliver revenue of USD74.0 million from its core PET business.
PET is the highly recyclable, lightweight, resealable and shatter-resistant plastic used by a variety of food and beverage and home and personal care product manufacturers. Ngoc Nghia’s longstanding relationships with a range of international and domestic clients such as Unilever, Coca-Cola, Pepsi and Vinamilk will further help drive the company’s growth.
The PET packaging sector outperformed the plastic packaging industry with a registered CAGR of 15.9% during 2010 – 2017 driven by the dynamic growth in the consumer goods sector, namely non-alcoholic drinks, home and personal care, and sauces and condiments, which are expected to deliver healthy growth over the coming years thanks to Vietnam’s growing population with rapid urbanisation and increasing household spending.
“Ngoc Nghia is the perfect example of a market leading company we like to invest in. It is well-established and serves some of the sectors that are benefitting from Vietnam’s strong domestic consumption story. Its management team is experienced and recognises the need to innovate into new areas such as packaging for milk and alcoholic beverages. They evolve with the market, which is why they have invested in advanced equipment and have a strong commitment to research and development focused on minimising environmental impact. We look forward to working with them to take their company to its next stage of growth,” said Andy Ho, Managing Director of VOF.
Ms. La Bui Hong Ngoc, Chief Executive Officer of Ngoc Nghia said, “As we looked at expanding our manufacturing capabilities as well as our market penetration, particularly in northern Vietnam, we considered a range of financing options. Ultimately, we determined that VinaCapital’s strong track record of private equity investing provided not just the capital we need but also a partner with the experience that will enable us to meet our long-term business objectives.”