IFC eyes $20 mln investment to fuel GS25 store chain expansion

The World Bank’s investment arm IFC is considering a new investment of about $20 million into the GS25 convenience store system in Vietnam to drive the chain’s expansion until 2025.

A proposal from the global investment firm seen Wednesday aims to support GS25 Vietnam’s growth.

GS25 Vietnam has garnered attention this year as the brand marked an important milestone of 200 stores in early November. Portfolio diversification and retail ecosystem optimization are other critical strategies for businesses to shake on new deals and increase brand exposure.

GS25 Vietnam was launched in the country in 2017, with 187 stores in Ho Chi Minh City and surrounding provinces by the end of this September. It is based on the GS25 convenience store concept from South Korea, which was brought to Vietnam by two partners - Korean firm GS Retail Co. Ltd. (GSR) and Son Kim Retail, which is part of HCMC-based conglomerate Son Kim Group.

IFC said it has been invited to invest up to VND460 billion (about $20 million) in new quasi-equity to support GS25 Vietnam’s 2022 - 2025 chain.

The chain’s typical store formats about 150 square meters including dine-in seating. It also sells fresh food, fresh groceries, ready-to-eat, ready-to-cook products, and Korean-made products.

GS25 Vietnam is using a leased warehouse of 5,755 square meters in Thu Duc city on HCMC’s outskirts from an integrated logistics services provider, CJ Korea Express Vietnam, including warehouse storage and operations, local transportation, and delivery services. The main items handled are grocery, beverage, living goods, snacks, and health and beauty products.

According to IFC, its review of the proposed investment was conducted in February and March 2022, including a review of environmental, health and safety (EHS) and social information provided by GS25 Vietnam, and interviews with the senior management from Son Kim Group and the Korean-Vietnamese joint venture with persons in charge of human resource management, quality control management, construction management, and operations management.

Quasi-equity is a hybrid form of finance with characteristics of both debt and equity investments. Quasi-equity offers non-dilutive equity risk capital that is paid back based on the performance of the company. Non-dilutive means that the current owners do not lose any part of their ownership in the company. Quasi-equity is also known as venture debt.