Private conglomerate Bamboo Capital continues to rise in stature

Bamboo Capital Group has been effectively applying its M&A strategy thanks to the vision of its leadership and its post-M&A business restructuring.

Only 12 years since its establishment, Bamboo Capital, listed on the Ho Chi Minh Stock Exchange (HoSE) as BCG, has built an ecosystem of more than 50 member and affiliated companies, and more than 2,000 employees. Operating widely across the country, the group boasts total assets of over VND42 trillion ($1.65 billion).

Post-M&A miracles

Established in 2011, Bamboo Capital started by specializing in providing consultancy on and arranging M&A deals to raise capital. Accumulating internal strength from the early days, in 2015, Bamboo Capital acquired Transport and Industry Development Investment Corporation (Tracodi) - an equitized state-owned enterprise. After a successful restructure, Tracodi became an important member in charge of construction and infrastructure at Bamboo Capital. Improved business results after the M&A deal helped Tracodi smoothly list on the HoSE as TCD in 2017.

During the 2017-2024 period, Tracodi was consistently named on a list of companies with the fastest growth rates in Vietnam. It has strived to become a reputable general contractor in the fields of civil, infrastructure and industrial construction. The firm is currently the general contractor for energy and real estate projects under the Bamboo Capital ecosystem.

In addition, it has won public investment projects in the field of transportation infrastructure. Learning from its own M&A experience, Tracodi has acquired and merged with a number of smaller construction companies and quarries to improve competitiveness and proactively prepare material resources.

M&A remains a playground where foreign investors with financial advantages prevail over domestic ones. But in that context, Bamboo Capital surprised the market with a "reverse M&A" deal when it and its member company BCG Financial acquired 80.64% of AAA Insurance shares from an Australian corporation.

This deal was honored in the top 10 outstanding deals by Vietnamese companies acquiring foreign businesses in the 2009-2023 period. With the acquisition of AAA Insurance, Bamboo Capital expanded its operations to the field of financial services - insurance.

When the acquisition took place at the end of 2021, AAA Insurance had an accumulated loss of nearly VND800 billion ($31.48 million). However, with experience and breakthrough restructuring, Bamboo Capital breathed new life into AAA Insurance by changing senior personnel, using new effective governance methods, optimizing operating costs, expanding product distribution channels, and developing a branch network across provinces and cities nationwide.

In addition, AAA Insurance also focused on digital transformation, applied technology to the sales and customer care process, and professionalized the contingent of insurance consultants, providing the quickest and most convenient services to customers.

Just over two years since joining Bamboo Capital, AAA Insurance truly had a new look. In 2023, it changed its name to AAA Insurance Joint Stock Corporation to match its new stature. The company’s revenue before the M&A deal was just over VND190 billion ($7.48 million), but this climbed spectacularly through 2022 and 2023, and is expected to reach VND1.5 trillion ($59 million) this year. The company has risen from 27th to the top 15 major non-life insurance companies in Vietnam in that time.

Another business successfully acquired and restructured by Bamboo Capital is Tipharco Pharmaceutical JSC. Established in 1976 as Tien Giang Pharmaceutical Company, Tipharco has the longest history of all the pharmaceutical companies in the southern region.

In 2021, before Bamboo Capital acquired Tipharco, this pharmaceutical company posted revenue of VND203 billion ($7.99 million) and after-tax profit of only VND900 million ($35,418).

At the end of 2022, less than a year after joining the Bamboo Capital ecosystem, Tipharco's business results rose spectacularly with revenue of VND297.1 billion ($11.69 million), a year-on-year growth of 46%, and after-tax profit of VND18.2 billion ($716,240), 19 times higher than 2021 and the highest in the company's history.

In 2023, Tipharco's stock, DTG, officially moved from the Unlisted Public Companies Market (UPCoM) to the Hanoi Stock Exchange (HNX). Last year, Tipharco continued to make breakthroughs by recording net revenue of VND372.6 billion ($14.66 million) and after-tax profit of VND30.6 billion ($1.2 million), up 25% and 68% from the previous year, respectively. Its 2024 respective figures are expected at VND406 billion and VND33.2 billion.

M&As are also a strategy frequently used by Bamboo Capital's pillar companies like BCG Energy and BCG Land.

BCG Energy often acquires potential renewable energy projects that have been or are in the process of completing legal procedures, such as the BCG Phu My solar power and Khai Long wind power projects.

After less than seven years of operation, thanks to its effective M&A strategy and sound project implementation capacity, BCG Energy has total assets of nearly VND20 trillion ($787 million), produces about 600 MW of solar power, and is one of the top three renewable energy enterprises in Vietnam.

Similarly, BCG Land, the real estate arm of Bamboo Capital, in addition to developing real estate projects, it has expanded its land fund through M&As, including Malibu Hoi An, King Crown Infinity, and Hoian d'Or. Many other real estate projects have been acquired by BCG Land as valuable reserves for the future.

Comprehensive, flexible M&A strategy

Currently, Bamboo Capital operates as a multi-industry corporation based in five main areas: renewable energy, real estate, infrastructure-construction, financial services-insurance, and pharmaceutical manufacturing.

Pham Minh Tuan, vice chairman of Bamboo Capital, once shared: "M&A is both a culture and strategy that has been applied consistently and flexibly by Bamboo Capital. Thanks to this, the group has developed strongly over the past 10 years."

During favorable market times, Bamboo Capital has quietly accumulated internal resources and capital. When a suitable opportunity appears in the market, Bamboo Capital uses these resources to acquire potential projects at attractive valuations, he said.

As market difficulties lingered, Bamboo Capital applied a more cautious strategy, focusing its resources on core activities, he said, adding as soon as it realized that the market and macro context of the energy industry had positive signals, Bamboo Capital quickly seized M&A opportunities to expand in the energy sector into the waste-to-power segment after a period of thorough research.

Waste treatment is a lingering problem in many large cities in Vietnam, so waste-to-power plants are necessary to treat waste and protect the environment without affecting people’s lives. Besides, waste-fueled power has attractive economic potential. Revenue sources from a waste-to-power project are diverse, with waste treatment services, electricity sales, and sales of carbon credits from reduced CO2 emissions. In particular, the government in general and Ho Chi Minh City in particular support and create favorable conditions for investors in these projects.

Grasping that need, in early 2024, Bamboo Capital officially entered the waste-to-power field with BCG Energy’s acquisition of Tam Sinh Nghia Investment and Development JSC. Tam Sinh Nghia operates waste treatment, classification, and incineration plants in HCMC, and Long An and Kien Giang provinces.

In 2024, BCG Energy will build the first Tam Sinh Nghia waste-to-power plant in HCMC’s Cu Chi district. Once its first phase is completed in late 2025, the plant will process 2,000 tons of garbage and generate up to 70 MW per day. The second phase, with respective capacities of 5,200 tons of garbage and 130 MW per day, is expected to be completed in 2026. At the same time, BCG Energy will also research and build similar plants in Long An and other provinces.

In addition to the waste-to-power segment, this year BCG Energy will restart and accelerate the implementation of a series of large-scale renewable energy projects. According to the Bamboo Capital leader, the group persists with renewable energy because it is poised to bring great benefits to the firm.

At its recent 2024 AGM, BCG Land said that one of its key strategies for the coming period is to find potential projects through M&As. The total land fund of BCG Land projects over the next five years (2024 - 2028) is expected to increase to about 5,080 hectares. Of which residential real estate will account for 10%, resort real estate 20%, and satellite urban areas 70%.

The National Power Development Plan VIII and its implementation guidelines have been approved. In addition, the real estate market is also showing signs of warming up, and the economy is on the road to recovery. To prepare resources to welcome new opportunities, Bamboo Capital will issue 266 million shares at a 2:1 ratio to existing shareholders to increase capital.

On May 13, Bamboo Capital finalized the list of shareholders for share issuance. Shareholders can transfer their purchasing rights from May 16 to 30. The rights are transferred once and cannot be transferred to a third person. Shareholders will need to register to buy and pay for shares from May 16 to June 4.

After completing the issuance, Bamboo Capital will continue to issue 80 million bonus shares to shareholders with a ratio of 100:10.

If these two issuances are successful, Bamboo Capital's charter capital will climb from VND5.34 trillion to VND8.8 trillion ($346.3 million), helping the group increase internal resources to successfully implement projects and have money to carry out M&As with potential new projects, thus bringing better value to shareholders in the long run.

In the stock market, BCG closed Friday at VND9,590 ($0.38) per share.