HAGL Agrico to issue 87.4 million shares in private placement

Vietnam Investment Review

If the shareholders of Hoang Anh Gia Lai Agricultural JSC (HAGL Agrico), a subsidiary of conglomerate Hoang Anh Gia Lai Group (HAGL), approve the plan to sell 87.4 million shares in a private placement, will Truong Hai Auto Corporation (THACO) pounce to increase its holding in the firm?

HAGL Agrico has announced intentions to put 87.4 million shares worth VND16,000 apiece on sale to raise VND1.399 trillion ($61.9 million) from the sale.

These shares will not be transferable for one year. Interested investors need to be able to support HAGL Agrico to apply technology in cultivation to improve its capacity. Besides, the investors must have ample financial potential and be willing to accompany HAGL Agrico for a long time.

The sale opens an opportunity for THACO to increase its holding in HAGL Agrico.

Previously, on August 8, HAGL and THACO officially organised a ceremony to announce the strategic co-operation between the two companies after the signing ceremony on August 3.

According to the agreement, THACO and its shareholders spent approximately VND3.8 trillion ($168.1 million) on buying convertible bonds from HAGL Agrico, VND2.2 trillion ($97.3 million) of which came from Thaco alone.

Accordingly, THACO will be in charge of restructuring the entire operations of HAGL Agrico with the total investment capital of VND12 trillion ($530.97 million).

Besides, THACO, through Dai Quang Minh Real Estate Investment JSC, bought a 51 per cent stake in Hoang Anh Gia Lai Myanmar Co., Ltd. and is expected to continue increasing its holdings to 65 per cent with the total investment of VND4 trillion ($176.99 million).

After the deal, THACO and Dai Quang Minh will be in charge of developing the second phase of HAGL Myanmar with the total investment capital of $320 million, which is expected to be completed in 2020.

The co-operation between THACO and HAGL will pioneer the application of 4.0 technology in the agricultural sector, while simultaneously rechannelling investment flows into the agricultural sector, expanding the playground for newcomers.

Nguyen Hong Khanh, head of Research at Vietnam International Securities JSC (VIS), told VIR that the tie-up will bring long-term benefits to THACO that are worth many times more than the amount it spends on it.

“Despite having a great debt burden, HAGL is renowned for its professionalism and responsibility, large land reserves, and process technology. Most of its projects were developed professionally. HAGL’s products also enjoy high competitiveness in the local and overseas markets,” Khanh explained THACO’s rationale for the buy into HAGL.

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