August 7, 2018
Vietnam poultry firm wants government's help to sever partnership
Ba Huan JSC, a Vietnamese poultry company, is unhappy with its six-month-old investment partnership with asset management firm VinaCapital, and has called for the country's prime minister to help end the deal.
According to a DEALSTREETASIA report, Ba Huan argues that the deal is unreasonable as its terms were initially stipulated in English. This, the company claimed, had led to confusion, with Ba Huan apparently agreeing to the deal in a haste. As a result of the partnership, VinaCapital's flagship fund Vietnam Opportunity Fund (VOF) invested $32.5 million for minority stake in the company.
Ba Huan's main grievance, as communicated to the government in a petition, is that the internal rate of return (IRR) of 22% per year sought by VinaCapital is too high. The company contended that it would be fined or has to return the investment capital with an additional 22% interest, if IRR is not fulfilled. If Ba Huan does not commit to those terms, it is obligated to transfer to VinaCapital or its partner at least a 51% stake in the company.
Ba Huan pointed out that the partnership also limits the company's involvement in other forms of businesses except chicken and eggs. Its other complaint alleged VinaCapital's inclination to veto all board decisions.
Both companies are currently working together to find a solution, a representative of Ba Huan said.
Ba Huan, which is established in 2001, contributes 30% to Vietnam's pasteurised egg market. The company has invested heavily in its operations and acquired modern production lines from Europe. It operates two fully enclosed industrial poultry farms, including a layer farm with over 1.5 million chickens for commercial egg production, and a broiler farm with over 400,000 chickens for meat production.
On a daily basis, Ba Huan supplies over 1.7 million eggs, delivers over 15,000 chickens, and processes over 25 tonnes of fresh poultry meat.