Central Group has completed the acquisition of Big C Vietnam worth €1 billion (40 billion baht) with a bridge loan from Bangkok Bank (BBL) to fund the deal.
Thailand's largest retail conglomerate received the one-year bridge loan that will be restructured into a longer-term loan later, said Central Group chief financial officer Prin Chirathivat.
The two Big C deals in Thailand and Vietnam are not directly related, he said.
French retailer Casino Group sold its stake in Big C Supercenter Plc (BIGC) and Big C Vietnam -- both businesses comprise hypermarkets, supermarkets and convenience stores -- to lower its hefty debt. TCC Group, an investment arm of liquor tycoon Charoen Sirivadhanabhakdi, through Berli Jucker Plc (BJC) trumped Central Group to take over a 58.56% stake in Big C Thailand for 122 billion baht, while Central Group was the winner for the Vietnam unit.
Central Group later accepted BJC's tender offer by divesting its entire 25% stake in BIGC for 50 billion baht.
Central Group had agreed to buy Big C Vietnam before deciding to sell its shares of Big C Thailand, said Mr Prin. Proceeds from the share sales would be used as reserves for the company's cash flow, not for share payment in Vietnam, he said.
Initially the company will keep the current business direction of Big C Vietnam and apply its retail business expertise there. Vietnam has high growth potential with a population of around 95 million, said Mr Prin.
Central Group will use the online shopping channel Zalora to support business expansion in Vietnam in addition to existing channels. Synergy with retailers in the group such as Power Buy and Central Marketing Group is another key strategy for Vietnam, he said.
"We have no plan to open malls under the Central brand in Vietnam soon because we need to study the market first and strengthen our balance sheet there. We expect to continue spending there the next few years," said Mr Prin.
Its Vietnam business operation is still mired in losses after it acquired assets and needed to amortise asset depreciation. The operation there is expected to take three years to record a net profit, but its cash flow is positive now.
Earlier in Vietnam, Central Group through Power Buy -- Thailand's largest electronics chain -- acquired Vietnamese electronics retailer Nguyen Kim Trading Joint Stock Co. Central has been expanding its presence in Vietnam since 2013 when it started investing under Robinson Department Store (Vietnam) Joint Stock Co.
Recently it opened its first Robins department store in Hanoi and its second in Ho Chi Min City. The company also operates sports retailers through brands such as Supersports, Crocs and New Balance.
A source familiar with the Vietnam deal said BBL is the sole lender for the bridge loan and the short-term loan will be restructured to a long-term loan under either syndicated or single lending from the Thai bank.
In related news, Mr Prin said Central Group plans to open a second Central shopping mall in Jakarta in the third quarter. The group decided to use an organic growth strategy in Asean's most populous country because of the lack of assets for acquisition, he said.