Billion-dollar investments by SK Group, Korea's third-largest chaebol, in Vietnam

How big is SK Group?

In terms of revenue, SK Group is the third largest chaebol in South Korea, after Samsung and Hyundai. In 2023, the group recorded revenue of 99.64 billion USD, a slight decrease from 102.53 billion USD the previous year. SK does not stand for South Korea but for Sunkyong - a textile company - the group's predecessor. This enterprise began to emerge after the 1950s of the 20th century, when the Korean government assigned a few companies to lead key industries. SK changed its name from Sunkyong Group to SK Group in 1997. The main foundation of SK Group started from the energy and chemical sectors. SK Group includes many subsidiaries that share the SK brand and the group's management culture called SKMS (SK Management System). Currently, the group's largest enterprises are mainly in the chemical, oil and gas and energy sectors. In addition, SK Group also owns the largest wireless mobile phone service provider in Korea, SK Telecom, and provides services in construction, transportation, marketing, domestic telephone, high-speed internet and wireless broadband. Notably, since 2010, SK has continued to expand its business scope into the semiconductor sector with SK Hynix, the world's second largest memory chip supplier after Samsung Electronics. SK Hynix currently has a market capitalization of 111.48 billion USD, the second largest in Korea after Samsung. The company is headquartered in Seoul (Korea) and has branches in the US, China, Singapore... The head of the SK Group "empire" is Chairman Chey Tae-won, grandson of Mr. Chey Jong-gun, founder of SK Group. As of June 25, Mr. Chey Tae-won's net worth is estimated at about 1.2 billion USD, according to Forbes.

Billion-dollar investment portfolio in Vietnam

SK Group's billion-dollar investment in Vietnam can be mentioned as the $1 billion investment deal (about VND 23,300 billion) to buy shares of Vingroup Corporation in mid-2019. Since then, SK Group has become a strategic partner of billionaire Pham Nhat Vuong's group. According to the agreement at that time, SK Group registered to buy 154.3 million privately issued shares from Vingroup and bought back 51.4 million VIC shares owned by VinCommerce. SK Group's total ownership after this deal is 205.7 million VIC shares, equivalent to more than 6% of Vingroup's charter capital. The average price for the transaction is VND 113,000/share. According to Vingroup's 2023 annual report, SK Group's representative unit still owns 5.97% of charter capital, equivalent to nearly 231.5 million VIC shares. SK Group's stake is the fourth largest in the list of major shareholders at Vingroup, after Vietnam Investment Group, Mr. Pham Nhat Vuong and VMI Real Estate Investment and Management Company. Another significant investment of SK Group is in Masan Group, where billionaire Nguyen Dang Quang is Chairman of the Board of Directors. At the end of 2018, Masan announced the completion of the transaction with SK Group, when the Korean business giant spent 470 million USD (equivalent to 11,000 billion VND) to own nearly 110 million treasury shares of Masan, with a transaction price of 100,000 VND/share. With the above investment, SK holds 9.5% of shares, officially becoming the largest foreign shareholder of Masan Group. According to Masan's 2023 annual report, SK Group members currently own 9.22% of the group's capital. At the end of 2019, Masan Group acquired VinCommerce Company (owning the supermarket system and convenience store chain Vinmart, Vinmart+) from Vingroup. By 2021, Masan announced that SK Group had purchased 16.26% of VinCommerce's shares for a total cash value of 410 million USD. In addition, SK Group also invested 340 million USD to own 4.9% of The CrownX's shares (the unit owning the WinMart and WinMart+ store chains). After the transaction, Masan and SK Group's ownership ratios at The CrownX were 85% and 4.9% of capital, respectively.

SK Group invests in many companies in Vietnam (Photo: SCMP).

In addition, SK Group also invested in the pharmaceutical industry with investments in two pharmaceutical companies in Vietnam. In 2022, Pharmacity Pharmaceutical Joint Stock Company announced that its founder and General Director Christopher Randy Stroud (Chris Blank) was no longer its legal representative. This position was replaced by Director Nguyen Nhu Nam - Investment Manager of SK Group. SK Group is said to have invested about 100 million USD in Pharmacity, through owning shares of parent company Maroon Bells. SK Group's member company also invested in IMP shares of Imexpharm Pharmaceutical Joint Stock Company. In 2020, the Korean group bought 24.9% of IMP shares from funds belonging to the Dragon Capital group and several other funds. By the end of 2023, according to Imexpharm's annual report, SK Group and related parties owned 64.8% of IMP's equity, becoming the largest shareholder of this enterprise. SK Group is also on the list of shareholders of Vietnam Oil Corporation (PV Oil). As of December 31, 2023, this foreign shareholder owns 5.23% of the capital of this oil and gas enterprise, in addition to the other major shareholder, Vietnam Oil and Gas Group (80.52% of capital). SK Group's plan to divest capital in the Vietnamese market was mentioned by The Korea Economic Daily in 2022. At that time, SK Group was considering selling some of its assets in Vietnam and Malaysia owned by SK South East Asia Investment. However, a specific decision has not been made yet. "Which company to sell shares in and how large will be determined later," said an SK Group leader. At the end of 2023, SK Group leaders denied rumors of divestment in Vietnam, according to Money Today. In addition, the group is discussing long-term business cooperation with the Vietnamese government and major domestic companies. Vietnam has been chosen as a business base in Southeast Asia. Korean investors are expected to invest in real estate, consumer goods, health, and industrial sectors... Recently, according to information from Maeil Business Newspaper - a famous economic newspaper in Korea - SK Group is planning to sell its shares in large Vietnamese corporations to recover its initial investment of 1,000 billion won (about 18,320 billion VND). SK Group is in the process of restructuring its business operations, so it will re-evaluate its investments to ensure cash flow. Accordingly, SK Group may exercise its put option to sell 9% of its shares in Masan Group. SK Group is looking for a partner to make the purchase. The investment amount in 2018 was about 450 million USD. The amount of money from selling shares can be recovered by the end of this year. This group will hold a strategic meeting from June 28 to June 29 to seek strategies to restructure the investment. However, the company chaired by billionaire Nguyen Dang Quang has spoken out about the information that SK Group is divesting capital from Masan as reported by a Korean newspaper. On June 24, Masan issued a statement confirming that the information that SK Group had exercised its put option (right to sell shares) to sell 9% of its shares owned at Masan Group was incorrect. Up to now, SK Group has not exercised its put option. According to Masan, both companies are in the final stages of a specific roadmap, under favorable market conditions, for SK Group to reduce its ownership stake in Masan Group. SK Group has identified professional investors with international scale and understanding of Masan's business operations to transfer its ownership shares. Masan affirmed that this roadmap is built to protect and help maximize value for shareholders of both companies. Source: https://dantri.com.vn/kinh-doanh/cac-khoan-dau-tu-ty-usd-cua-sk-group-chaebol-lon-thu-3-han-quoc-o-viet-nam-20240626054001857.htm