Auto maker Thaco to pump in $1 billion for HAGL firefighting

HAGL chairman Doan Nguyen Duc revealed that in early 2018 he had pleaded with Tran Ba Duong, chairman of Truong Hai Motor (Thaco), for investment at a critical time when HAGL lacked the funds to grow fruit trees and debts fell due.

After trips to HAGL’s farms in Laos, Cambodia and Vietnam and ongoing property projects in Myanmar, Thaco decided to invest in both.

In March Duong helped fix debts of VND1.58 trillion ($67.4 million) owed by Agrico, HAGL’s agriculture company, and invested in its orchards.

Recently, on August 3, Thaco signed a strategic agreement with HAGL to invest in Agrico and HAGL Land Myanmar.

Thaco paid VND3.8 trillion ($168.8 million) for one-year convertible bonds issued by Agrico (HNG), equivalent to over 221 million shares, which will give the carmaker a 35 percent stake.

A subsidiary of Thaco, Dai Quang Minh Real Estate Investment, paid VND4 trillion ($177 million) for a 51 percent stake in HAGL’s realty firm in Myanmar.

Dai Quang Minh plans to increase its holding to 65 percent and take over construction of the delayed Melia Yangon at an estimated cost of $200 million.

Duc said Thaco’s total investment would come to VND22 trillion, or almost $1 billion.

Thaco chairman Duong said he saw HAGL’s current difficulties but also great ambitions in its projects.

Duong said he would take charge of the overall restructuring of HAGL.

Thaco would invest VND12 trillion ($533 million) in plantations and adopt high-technology and digitization and mechanization in the production chain.

Thaco and Dai Quang Minh will spend another VND7.4 trillion ($328 million) on the Myanmar project which is set to be completed in 2020.

Prime Minister Nguyen Xuan Phuc called the strategic tie-up between Thaco and HAGL a "good match", and hailed their huge agricultural ambitions.

Dong Nai-based Thaco was established as an auto and commercial vehicle maker in 1997 by Duong. It has a plant in Quang Nam and 89 showrooms and 53 dealerships.

It makes trucks and buses and assembles cars for brands like Kia (South Korea), Mazda (Japan), and Peugeot (France).

Agrico has been growing fruits since 2016. Last year passion fruit, banana, chili, and dragon fruit fetched the company VND1.6 trillion ($71 million), or around 49 per cent of its total revenues. Its main fruit markets are China and Thailand besides Vietnam.

Agrico, which has 100,000 hectares of land, cheap labor and 83 cold storage facilities in Laos, Cambodia, Myanmar, and Vietnam and 25 major distribution partners, said its fruits are sold to a market of three billion in China, India, Japan, South Korea, and other ASEAN member countries.

In the last three months the Agrico share price has risen 2.5-fold, giving it a valuation of VND15 trillion ($666.6 million).