Investment fund VinaCapital reconciles to leading egg firm breakup demand

By Ha Thanh   August 8, 2018 | 12:30 am PT
Investment fund VinaCapital reconciles to leading egg firm breakup demand
Workers processing chickens at a factory of Ba Huan Jsc. Photo courtesy of Ba Huan Jsc
VinaCapital and egg firm Ba Huan seem set to part ways acrimoniously after the fund agreed to the company’s demand to stop their partnership.

“VinaCapital has decided to stop investing in Ba Huan JSC and is negotiating with the firm in closing the deal on the basis of the law and mutual interest,” it said in a statement.

VinaCapital’s flagship fund Vietnam Opportunity Fund (VOF), in February, invested $32.5 million in the country's leading egg firm Ba Huan for an undisclosed minority stake. The firm holds over 30 percent of the pasteurized egg market in Vietnam.

The latest move follows Ba Huan’s letter to Prime Minister Nguyen Xuan Phuc Monday seeking to end the deal it made with VinaCapital, one of the largest investment funds in Vietnam.

It accused the fund of trying to take over its brand and management.

Pham Thi Huan, CEO of Ba Huan JSC, told VnExpress that one of the reasons for this request is the disparity between the English and Vietnamese versions of the deal.

VinaCapital had “added by itself” an internal rate of return of 22 percent a year to the Vietnamese memorandum, three times bank interest rates on deposits, without the approval of Ba Huan JSC, she said.

VinaCapital also set a condition that Ba Huan will have to return to the fund its investment capital with the 22 percent interest, or transfer a stake of at least 51 percent to VOF, should it cannot achieve its business plans within three years, she said.

“These are merely the numbers VinaCapital expects, not something both parties have agreed upon,” Huan said.

The firms have only signed the English version of the contract, which doesn’t include those terms, she said.

Huan added that VinaCapital has also constantly sought veto powers over board decisions.

“The fund wants to have management authority over Ba Huan and take over our brand.”

But in its statement Tuesday VinaCapital said there is no difference between the English and Vietnamese agreements.

Ba Huan JSC, established in 2001, received it in both English and Vietnamese to scrutinize before signing, it said.

It also claimed it does not have any intention to manage or take over Ba Huan JSC, which has never been part of its strategy.

VinaCapital, founded in 2003, has offices in Vietnam, Singapore and Myanmar.

Ba Huan sells 1.7 million eggs and 15,000 chickens every day on average. Its revenues are expected to top $90 million this year.

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