Thai conglomerate Charoen Pokphand Group has sold 71 per cent of its stake in animal feed manufacturer CP Viet Nam to Hong Kong-based Charoen Pokphand subsidiary CPP in a deal worth US$609 million, CP Viet Nam confirmed on Monday.
However, the deal is attracting controversy for transferring the control of a major player in the feed industry outside the region.
Vissan Ltd General Director Van Duc Muoi told the Dau tu (Vietnam Investment Review) that Vissan was concerned about the deal, since CP Viet Nam already cornered most of the domestic market for agricultural materials used in producing animal feed.
“The infrastructure of Viet Nam’s livestock industry is weak, and the domestic animal feed market in particular is under the control of foreign companies, including CP Viet Nam,” Muoi said.
However, CP Viet Nam General Director Sooksunt Jiumjaiswang Lerg said that the deal simply represented the transfer of capital within the group’s managment scope.
“Selling our stake to CPP Hong Kong is to easily mobilise capital for business expansion, as the Hong Kong-based company is listing shares on the Hong Kong stock market,” Lerg said.
CP Viet Nam previously raised extra capital by borrowing from its Thai parent company. “However, as the demand for investment by CP Viet Nam has grown quickly, we need to be able to raise more capital through the stock market,” Lerg said.
CP Viet Nam accounts for 20 per cent of the total domestic market share in the feed industry. It also provides 5 per cent of the nation’s pork, 40 per cent of processed chicken and 50 per cent of chicken eggs. It has planned to expand its production to other products with the aim of establishing a new plant each year. The company is currently building a food processing factory in Ha Noi before completing one more in the south. — VNS