Fraser and Neave said it wants to increase its exposure to the Vietnamese market through its move to raise its stake in local dairy group Vinamilk.

The Singapore-based food and beverage business said yesterday (12 December) its bid to increase its shareholding in Vinamilk, Vietnam’s largest dairy business, had been successful.

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Vietnam sovereign investment fund, the State Capital Investment Corporation, was looking to sell a 9% chunk of its 45% stake in Vinamilk. The SCIC said in September it planned to offload its shareholding in Vinamilk in stages. F&N was the only buyer of shares from this first portion of its stake in Vinamilk.

F&N, which already owned just over 10% of Vinamilk, said yesterday it had reached agreements to buy another 78,378,300 more shares in the company, representing approximately 5.4% of the SCIC’s stake. The bid, first announced last week, has been made via two of F&N’s subsidiaries. 

The Singapore-based group is paying SGD9.05 per share for the new stake, or a total of SGD7.1m. The deal builds on F&N’s existing 10.95% stake in Vinamilk, bringing its total ownership to 16.35%.

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“F&N expects that the increased stake in Vinamilk will allow F&N to reap greater streams of dividend income and increase its foothold in Vietnam. F&N believes that Vinamilk’s existing businesses and product offerings offer a solid foundation to build on future value creation, supported by well-invested production facilities and strong cash generation,” F&N said.

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Speaking to reporters to announce the deal, F&N CFO Hui Choon Kit said: “We have been waiting for the State Capital Investment Corporation to sell a significant volume of Vinamilk shares for a very long time. We are happy with the outcome now,” according to quotes published by The Asian Nikkei Review.

F&N’s food and beverage arm produces and sells soft drinks, dairies and ice cream. The division consists principally of a 56% stake in a Malaysia-listed entity, Fraser & Neave Holdings Bhd, an unlisted soft drinks and dairies business in Singapore, as well as ice cream operations in Singapore, Malaysia and Thailand. 

Through the unlisted F&B Singapore unit, F&N has a 70% stake in Yoke Food Industries Sdn Bhd, a Malaysia-based company that manufactures, markets and distributes canned beverages in Malaysia and exports to Singapore, Indonesia and Indochina. Fraser & Neave Holdings Bhd, meanwhile, has a 20% stake in Malaysian food and drink group Cocoaland.