Identifying Private Equity Opportunities in , and Thailand Sponsored by: JL Capital

Private Equity- Section AB Hill P., Matteo Ferrante, Neha Dodeja, Pratiksha Barasia, Uday Mehra (MBA Class of 2020 July) Executive Summary

Opportunities in Fintech in Indonesia

Opportunities in Consumer Retail in Vietnam

Opportunities in Food Manufactoring in Thailand

2 Executive Summary

• JL Capital is looking to make its first investment in SEA by focusing on promising indsutries in specific countries • The shortlisted industries represent (i) easy to understand market dynamics and business models (ii) potential JL Capital opportunities within the right ticket size (iii) underinvestment in the particular sector

• Fintech space is nascent but shows promise for a massive increase in TAM led by high TPV • Payments is the entry point for consumers, paving the future for Lending; Fintech lending can bridge the gap for unutilized financing capacity and access to credit in Indonesia Indonesia • SME lending is attractive and presents opportunities for investment from JL Capital

• Consumer retail is a fast-growing investment space in Vietnam with strong sales growth • E-commerce penetration is on the rise in Vietnam, however, retail players with offline presence are expected to succeed in online channels Vietnam • A potential investment target, market leader in baby retail, fits the relevant factors required for success

• Thailand is the kitchen of the world: Food processing contributes 23% of Thailand’s GDP • Packaged food shows a strong demand forecast in APAC with a focus on ready meal in Thai market Thailand • Recommend to target healthy ready meal, frozen fruits or halal food segment by local producers

3 Process

JL Capital to shortlist Deep-dive into Identify 1-2 potential Identify 3-4 industries 3 industries based on selected industries to deals in total (only if in target countries interest and core understand growing possible, or else share capabilities sub-sectors transcripts of conversations)

First presentation to JL Second discussion to talk Final discussion to present Capital about shortlisted industries final results and discuss next steps

4 Executive Summary

Opportunities in Fintech in Indonesia

Opportunities in Consumer Retail in Vietnam

Opportunities in Food Manufactoring in Thailand

5 The Fintech space in Indonesia is nascent - but shows promise for a massive increase in TAM led by high TPV1

Total Addressable Market (TAM) for the Fintech space in E-Money is a small fraction of total electronic payments in Indonesia Indonesia expected to grow by ~8x by 2025… 100% 90% 80% US$ Bn 70% 8.15x 60% 95.2 50% 40% 30% 20% 10% 8.0% 10.4 0% 1.8% 2017 2018 2019 2020E 2021E 2022E 2023E 2024E 2025E 2019 2025E E-money Credit cards Debit cards

…mainly driven by 4 key consumer trends Fintech loans in Indonesia are only 0.2% of total outstanding loans

800 0.40 730 690 1• Massive promotional spend: Mostly by Fintechs, e-Commerce 700 0.35 625 platforms and ride-hailing (mostly Payments led) 595 600 560 580 570 0.30 • Rising smartphone penetration: Risen from 25% in 2014 to >60% in 500 2 500 0.25 2019 400 • Growing internet TAM: Driven by Indonesia’s young, hyper internet- 400 360 0.20 3 engaged population, increasing disposable incomes 300 0.15 • Burgeoning offline use cases: Rising Fintech adoption by shopping 200 0.10 4 malls, Co-funding by merchants 100 0.05 0 0.00 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Fintech loans outstanding (US$ Mn) Fintech loans as % of total IDR loans Notes: (1) Total Payment Volume 6 Sources: OJK, Goldman Sachs Global Investment Research, Bank Indonesia, Macquarie Research Payments is the entry point for consumers, paving the future for Lending

Traditional Fintech service adoption cycle by consumers

Payments & Transactions Lending Financial Products

41 companies hold an e-Money license (as on Feb’20) 164 lending companies registered with OJK (Dec’19) E-commerce platforms are main players

x Highly concentrated market: Top 4-5 players ✔ Fragmented market landscape: No clear Small market: Very small market size and control >90% of transaction market share; market leader; Long tail of companies own >1% ~ growth due to low capital market penetration High-ticket investments will be required to enter of total loan share and financial literacy the market ✔ Under-penetrated market: Fintech loans in Low interest-generating business models: Evolving regulatory landscape: Bank Indonesia are only 0.2% of total outstanding x In a typical Fintech lifecycle, value is generated ~ Indonesia has launched QRIS to unify QR code loans through Payments & Lending first; Indonesia is based cashless payments; Reduces barriers to not at a stage to generate meaningful returns entry for new players Unaddressable market by traditional banks: from Financial Products ✔ Fintechs lending to SMEs are targeting invoice Significant growth potential: Only 1.8%1 of financing; Traditional banks have lengthy credit Consumer behaviour not shifting: This ✔ electronic payments in Indonesia happen approval processes for this segment ~ sector is primarily dominated by banks in through e-Money; ~8% e-Money transactions Indonesia; Despite e-commerce platforms, no expected by 2025 shift seen in consumer behaviour

Notes: (1) 2019 estimates by Bank Indonesia 7 Sources: Goldman Sachs Global Investment Research, Bank Indonesia, Macquarie Research Fintech lending can bridge the gap for unutilized financing capacity and access to credit in Indonesia

Low percentage of loan disbursements to GDP1 indicate an Majority of SMEs, middle & lower income individuals still unutilized financing capacity in Indonesia do not have access to credit in Indonesia2

Australia 122% Total MSMEs Total Individuals 63 Mn 186 Mn South Korea 94%

New Zealand 92%

Thailand 78% 74% 71% USA 78%

Japan 57%

China 49% Low percentage of Debt wrt GDP is directly 29% Indonesia 17% attributed to lower access to credit for 26% SMEs and low/middle income individuals 11% MSMEs Middle/Lower Income Individuals

Have access to credit No access to credit

Notes: (1) Ratio taken based on 2017 figures (2) As of 2018 end 8 Sources: International Monetary Fund, Asian Development Bank, Central Bureau of Statistics (ID), Ministry of Cooperative and MSME (ID), Central Bank of Indonesia, PwC SME lending is an attractive business model generating higher financing rates than traditional banks

Fintech lending market in Indonesia

Short-term consumer loans P2P loans targeted at SMEs P2P microfinance

Avg. ticket size ($): 70 Avg. ticket size ($): 140,000 Avg. ticket size ($): 200-350 Avg. loan tenure: 1-3 months Avg. loan tenure: 0.5-6 months Avg. loan tenure: 3 months Major players: Major players: Major players:

Platform1 • Major product offered by SME Outstanding credit (IDR Bn) 234 529 267 lenders is Invoice Financing Total credit underwritten (IDR Bn) 1,163 2,940 2,430 extending credit for up to 80% of the receivable value. NPLs2 1.05% 2.30% 8.0% • Traditional banks can’t engage in Active borrowers 1,776 1,193 15,436 this business due to lengthy credit Invoice financing rates (p. a.) 13-43% 12-20% 12-26% approval processes, so they have started acquiring minority stakes Borrower upfront fee 3-5% 3-5% 3% in SME lending platforms Banks having a minority stake -

Notes: (1) Numbers as of November 2019 (2) NPLs: Non-performing loans 9 Sources: OJK, Bank Indonesia, Macquarie Research, Company Reports Only a handful of venture deals have taken place within the Fintech SME lending space in Indonesia over the last 5 years

Mar’20: $23.5 Mn (C) Jun’19: $12 Mn (B) Feb’20: $10 Mn (B) Sep’19: $8.6 Mn (A) Nov’19: $1 Mn (B) Aug’19: $10 Mn (B) Dec’18: $0.2 Mn (S) Aug’18: $16.5 Mn (A)

Potential investment option1

Nov’18: $4.3 Mn (A) Apr’16: $1.2 Mn (S) Sep’19: $1 Mn (S)

Notes: (1) Investment recommendation based on industry, competitor and company analysis (not including financials) 10 Sources: Prequin Modalku: A potential investment option in Indonesia for JL Capital

Indonesia ,

Present as

Dec’19: Undisclosed amount of Debt funding Apr’20: $40 Mn (C) by existing investors and by Triodos Microfinance Fund, Triodos Fair an undisclosed bank Share Fund Funding Rounds Apr’18: $25 Mn (B) led by SoftBank Apr’16: $1.2 Mn (S) led by Alpha JWC Ventures, Sequoia India, Alpha JWC Ventures and Singapore Press Holdings Ventures, Golden Gate Ventures $900 Mn Total amount disbursed1 $948 Mn 52% loans greater than $10,000 Biggest ticket size segment 51% loans less than $11,000 8.0%3 Current default rate 3.36%

• Modalku is one of the 3 leading Fintech lending providers for SMEs in Indonesia, however it has not raised an equity round since 2016 • Modalku’s 2 main competitors – Investree and KoinWorks – have raised fresh funding in the last 1 year to increase their geographic footprint in Indonesia and for expansion to other Southeast Asian countries • Modalku raised debt in 2019, showing promise of using Leverage to boost Equity returns for the company’s business model • Comparison of both geographies shows that Modalku will require an influx of capital in Indonesia to improve its infrastructure for bringing down default rates and expanding its geographic reach in Indonesia

Notes: (1) As of Q2 2020 (Ongoing – Figures for 19 Apr 2020) (2) As percentage of overall loans disbursed (3) As per Macquarie Research 11 Sources: Modalku website, Funding Societies website Expanding the coverage for Indonesia’s “Credit Invisible” requires a tailored and innovative approach 1 • Since 2018, 70% of borrowers have been SMEs/individuals that had no prior credit access • As Java gets saturated, innovation is required to reach out to SMEs outside of Java, and in sectors currently untapped

Credit worthiness verification is essential before NLPs start blowing up 2 • Debt refinancing is one of the top 3 loan purposes, indicating a potential “over-leveraged” debt behaviour Things to • This behaviour might be more prevalent in conventional-to-online rather than purely online borrowers keep in mind before Important to monitor TKB901 along with NLPs for developing sustainable business models • OJK is currently implementing TKB90 to ensure players disclose their loan performance investing in 3 • This is an important measure to track irresponsible disbursement, and Fintechs should adapt their the Fintech business models based on TKB90 metrics as well Lending space in Fintechs will need to collaborate with financial institutions for stable financing 4 • By collaborating with financial institutions, Fintechs will have a more stable source of funds Indonesia • This also allows them to have wider use-cases within their loan portfolio

Indonesia’s Fintech Lending ecosystem is similar, but not comparable, to other countries • Majority of underserved SMEs not only have limited data but also limited physical access to due Indonesia’s 5 topography • Replicating business models of other countries will be ineffective compared to targeted business models

Notes: (1) TKB90 is a metric measuring debt repayment success rate over 90 days past due, the opposite of a Non-Performing Loan 12 Sources: Desktop Research Executive Summary

Opportunities in Fintech in Indonesia

Opportunities in Consumer Retail in Vietnam

Opportunities in Food Manufactoring in Thailand

13 Consumer retail is a fast-growing investment space in Vietnam with strong sales growth Vietnamese retail sales growth remain robust through-out …underpinned by 4 key macroeconomic trends in the economic cycles… country

Retail revenue and growth in Vietnam (2013-2020), Revenue, USD Billion ; Growth, % 1• Strong economic growth: Vietnam’s GDP has been increasing at 7% due to strong harvest and surging manufacturing sector 180 180 30 27% 160 • Rapid growth in consumer spending with higher 142 25 2 140 disposable income: Private consumption is 68% of 126 the overall GDP, highest in SEA, with a growing 120 115 20 103 middle class and heightened concerns about 100 85 94 hygiene and food safety 13% 13% 15 80 11% 11% 10% 10% 3 60 10 • Increase in foreign investment: 40% of supermarkets currently owned by foreign investors 40 5 due encouragement by govt policies 20 4 0 0 • Free-trade agreements: Better FTAs and bilateral 2013 2014 2015 2016 2017 2018 2020 agreements have made international food accessible to middle-classes

Notes: (1) Total Payment Volume 14 Sources: OJK, Goldman Sachs Global Investment Research, Bank Indonesia, Macquarie Research; Vietnam General Statistics Office Vietnam’s modern grocery market is expected to grow at 25.8% p.a. over the next 5 years, with a potential for further growth Grocery is the largest retail category by value, fastest growing Modern segment grocery penetration is expected to grow as in the SEA region GDP per capita increases

Breakdown of Vietnam retail market, %, 2018, 100% = USD 108 Bn Other Modern grocery size, 40 Non-store s USD bn, 2018 Apparel &retail 35 6% Footwear 30 Leisure 5%2% Thailand 25 Goods 6% 20 Grocer Indonesia 44% Health & Beauty 9% y 15 10 Malaysi Vietna 5 a m Home & 11% 0 Garden 0 5 10 15 20 25 30 35

17% Modern grocery Growth Electronic & 2018-2013 CAGR % Appliances

• Vietnam is fast-growing retail market with grocery as the largest • Vietnam’s modern trade penetration is currently at 8% which is lowest segment making up 44% of overall market amongst the SEA countries • There are 4 key factors for this trend: • The market is on the verge of significant modernization and is likely to 1. Increased urbanisation coupled with increased awareness follow the S-curve of other developed Asian markets 2. Consolidation of top players (Satra acquired Auchan) • As GDP per capita rises, modern grocery retail market is expected to 3. Entry of international players like 7-eleven, Big C grow from $4 bn to $20 bn by 2025 (5X growth)

Sources: Deloitte report: Retail in Vietnam, Feb 2019; McKinsey report: Seizing the fast-growing retail opportunity in Vietnam, Sept 2019 15 Consumer markets in Vietnam are still fragmented and there is ample room for modern trade channels Accelerating value contribution from modern trade channel...... with smaller format leading the modern retail chain emergence recently

Distribution of the retail sales from between Modern retail channels Average monthly shopping frequency of Vietnamese of modern trade and traditional channels, % 25.2 2010 18.2 2018 25% 32% 45% 8.9 9.5 4.5 2.2 3.3 2.5 1.3 0.0 0.8 1.2 Wet market Traditional Convenient Minimarts Personal Supermarkets Grocery Stores Case/ Drug 75% 68% Stores Stores 55%

2015 2017 2020

Modern Retail Tradtional Channels Channels

Sources: Vietnam's Distribution and Retail Channels 2018 by EVBN; Nielsen, VCSC 2018 16 There are six success factors that stand out as keys to making the most of retail opportunities in Vietnam Retail leaders exhibit 6 key success factors

▪ Ability to grow dense network of smaller stores in urban areas Retail players are 1 Network and scale ▪ Require access to funding and dedicated team finding right locations facing growing competition from both local and 2 Compelling value ▪ Successful retailers differentiate themselves by focusing on propositions specific dimensions like price, assortment, experience etc. international players. 3 Strong business ▪ Develop capabilities to tackle payment solutions, logistics, enablers proprietary products and loyalty programs Leveraging lessons in innovative ▪ Strengthen brand equity through marketing and build loyal technologies and 4 Strong brand equity customer base ▪ Local players have advantage over foreign more advanced markets, players ▪ Extensive on-the-ground experience can achieve 5 Local knowledge ▪ Understand local tastes, rules and regulations and trends success

Innovation and ▪ Provide both offline and online channels to serve customers 6 omnichannel platforms ▪ Innovation into smart stores

Sources: McKinsey report: Seizing the fast-growing retail opportunity in Vietnam, Sept 2019 17 E-commerce penetration is on the rise in Vietnam, however, retail players are diversifying to tap the entire ecosystem Online retail sales make up only 5% of total online sales, Retail players are pursuing omnichannel strategy to capture however it likely to grow with increase mobile penetration the market share in online

Online B2C sales vs online retail sales (2012-2020), Example 1: Sales, USD Billion ; % total online sales

20 Online B2C sales 8 ▪ Korean supermarket chain, LOTTE Mart Online retail 7 launched SPEED LOTTE mobile app to sales combine traditional and online retail 15 6 5.0% ▪ The online version has more than 1000 5 SKUs and delivers within 15kms 10.0 10 3.6% 4 2.8% 3.0% 6.2 3 1.8% 2.1% 5.0 Example 2: 5 4.1 2 0.7 3.0 0.7% 2.2 1 0 0 ▪ Bach Hoa XANH has 1000+ retail stores 2012 2013 2014 2015 2016 2017 2020 and has moved online with over 600 • Vietnam’s e-commerce industry is one of the fastest growing in the SKUs region, growing at 27% CAGR ▪ Parent company Mobile World has • E-commerce sector however is still in its early days with many players announced $43m investment to grow operating at a loss the business • Key success factors include overcoming logistics challenges and e- payment solutions

Sources: Deloitte retail survey (2018) 18 Vietnam Consumer Retail: Recent PE &VC Investment

Date Targets Acquirer ($US) Stake Growth 2017 Vua Nem (Mattress company) Mekong Capital $6 mn. 57.5%

Stages 2019 VinGroup GIC Singapore $500 mn. Investments 2008 Maison Mekong Capital $ 5mn.

IPO Notable acquisitions

Date Targets Acquirer ($US)

MM Mega Market Big C EUR 655 2016 Vietnam Supercenter mn.

Exits 2013 Ichiban Co. Berli Jucker $73 mn.

2014 VinMart VinGroup $12 mn.

Mobile World 2017 An Khang Pharmacy Investment

Sources: Tracxn June 2018 & CB Insights Jan 19 19 Vietnam has seen exits to IPO from previous VC/PE backed deals

Business Description: • Established in 1988, PNJ is the leading jewelry manufacturer and retail in Vietnam Year: 2007 Investor: Mekong and Reasons to invest: Vina Capital • Increasing revenues: Revenues from retail Amount: USD 8mn. jewelry store continuing to increase 28% YoY; retail network grown from 330 to 370 in 2019 Growth envisioned from: • Large customer base: Large number of (i) Revenue Growth customers over the last 30 years with high PNJ retail network (ii) Margin improvement switching costs for jewelry purchases 370 • Growing market: Jewelry retail sales likely to 324 Exits seen: grow as consumers rely on trusted brands 269 Mekong was able to • Established reputation in the jewelry 219 liquidate the investment business: Having been established 30 years 189 after 9 years with a gross back, PNJ has the reputation of being the return multiple of 2.2x country’s leading jewelry brand with high- quality, sophisticated products • Continuous innovation: PNJ has been continuously adapting to consumer trends and 2015 2016 2017 2018 2019 launching new collections

Sources: Pitchbook 20 Citimart, a supermarket chain, was acquired by Aeon with the aim of increasing to 500 stores by 2025

Business Description: Year: 2015 • The company engages in operating Investor: Aeon Company supermarket chains and offers groceries, Amount: 49% acquired food products, clothes, housewares and other products to its customers throughout Vietnam Growth envisioned from: (i) Revenue growth Reasons to invest: (ii) Profitability increase • Significant room for revenue growth: Aeon will assist Citimart in building the new brand Citimart Revenue Exit: and controlling product quality in the hopes of +15% (i) Acquisition by Aeon increasing the number of Aeon Citimart 69 Group, one of the stores to 500 by 2025, which will have about 60 largest retailing groups 10,000 products (ii) Similar supermarket • Increase in profitability: As supply chain chains have a good improve and economies of scale kick-in, likely chance being acquired to see increase in margins by a larger company • Increase in customer loyalty: Customers that is looking to likely to increase their loyalty to branded increase its presence stores where they can find quality and reasonable products 2015 2016

Sources: Pitchbook; DealstreetAsia, Desktop research, Mekong Capital presentation 21 Pharmacity can expect increased profitability with investors seeing an exit to another PE firm or straight as an IPO

Business Description: Number of stores • Founded by 3 young entrepreneurs, Pharmacity originally operated a chain of Year: 2019 and 2020 pharmacy stores; expanded its store Investor: Mekong and assortment to include health & beauty undisclosed investors products from 2016 Amount: USD 30mn. • Currently, largest pharmacy retail chain in Vietnam in terms of number of stores. Growth envisioned from: (i) Revenue Growth Reasons to invest: (ii) Margin improvement • Increase in customer loyalty: Customer (iii) Multiple expansion shopping from branded retail stores Number of customer loyalty card might exist for those • Steady increase in number of stores: holders that invested early- Pharmacity will expand from 1,000 stores by 1,660,000 stage in select 2021 and over 1,700 stores by 2025 companies • Improvement in store level profitability: Average basket size has been increasing by Exits envisioned: 14.8% CAGR from 2018-2025 and (i) Sell to a late stage • Same store sales: Continuous growth in VC/ PE firm average transaction/store/month by 5.4% 30,000 (ii) IPO CAGR 2017 2019 Sources: Pitchbook; DealstreetAsia, desktop research, Mekong Capital presentation 22 BIBO MART, market leader in baby retail is identified as a potential investment target in Vietnam Bibo Mart is the market leader in baby stores in Vietnam with a BiBo Mart clearly satisfies all the success factors large retail footprint and growth potential outlined that make it a solid potential target

Network and scale: Rapid growth with largest number of stores in baby retail

Compelling value proposition: Speciality store Name: Bibo Mart for mom and baby products with only 1 international competitor Description: Largest retail chain for mom and baby products in Vietnam Strong business enablers: Strong partnerships with international brands including Bubs Australia Established in: 2006 Strong brand equity: Number 1 company in Number of stores: 140 (as of Jan 19), across 22 Vietnam for selling high quality, branded products cities, 15K SKUs

Valuation: $140 mn. (as of 2018) Local knowledge: Founder and CEO, Mrs Trinh Lan Phuong has built company on local consumer trends Investors: 80% owned by founder, 20% investment from ACA Omnichannel platforms: Online platform, with call centre to support online customers

Recommend to pursue Bibo Mart as a potential investment for JL Capital

Sources: Pitchbook; DealstreetAsia, Desktop research 23 Executive Summary

Opportunities in Fintech in Indonesia

Opportunities in Consumer Retail in Vietnam

Opportunities in Food Manufactoring in Thailand

24 Thailand is the kitchen of the world: Food processing contributes 23% of Thailand’s GDP

Minimally processed Moderately processed Highly processed

Agricultural meat and seafood Canned and freeze-dried Packaged food (ingredients, produces snacks and meals) • Ranked 2nd largest exporter of rice and sugar in the world • 1st as exporter of canned tuna • 6th food seasoning exporter and • Top 5 for chicken and shrimp and canned pineapple 1st in Southeast Asia exports • 11th ready meal exporter in the • Major exporter of other seafood world, accounting for a 3.7% products

Major players include both domestic and international conglomerates:

Sources: Thailand Board of Investment 25 Packaged food shows a strong demand forecast in APAC with a focus on ready meal in Thai market

Packaged food outperformed global market in Packaged food is expected to continue APAC and Thailand outperforming global market (Historical Growth 2015 to 2019) (Forecast growth 2020 to 2024)

In 2019, Ready meal 10.8% sales was $613M in 9.8% Thailand and $3B in APAC

4.8% 3.8% 3.4% 3.3% 3.6% 2.9% 2.5% 2.3% 2.4% 1.5%

World APAC Thailand World APAC Thailand

Packaged Food Ready meal Sources: Euromonitor, Thai National Food Institute 26 In 2019, market for packaged food in Thailand reached $14B, with ready meals as the fastest growing sector

Dairy is the largest category, followed by rice, pasta and Ready meal shows the highest forecasted growth noodle through 2024

Rice, Pasta Edible Oils Annual Consumption Growth from 2020 to 2024 (%) and Noodles Ready Meals Processed Sauces, Meat and Dressings Seafood and 12.0% 10.8% Processed Condiments Fruit and 10.0% Vegetables Soup 7.4% Breakfast 8.0% Cereals Sweet Spreads 6.0% 5.3% Baked 4.8% 4.8% Goods Baby Food 3.5% 3.8% 4.0% 3.0%3.0% 2.9% 2.5% 2.8% 2.7% 1.8% 1.4% Sweet 2.0% Snacks 0.2% 0.0%

Savoury Snacks

Ice Cream and Frozen Dairy Desserts Confectioner 25% y

Sources: Euromonitor, Thai National Food Institute 27 Packaged food industry is highly developed in Thailand with Frozen and Chilled meals accounting for ~500m USD in sales in 2019

Frozen Ready Meal has the largest sales while Chilled Ready Four key trends explain the fast growth of Ready Meal Meal is growing the fastest at 14.7% CAGR industry in Thailand

Sales of Ready Meals in Thailand by Category Retail Value RSP – USD million 1• Rising middle- and upper-income consumers seek convenience premium meal options that are both healthy and hygienic • Both frozen and chilled ready meal is taking more market share from instant noodles as consumers reach for more exotic flavours and healthier options

2• Consumers seek fresher ingredients and less MSG in their meal • Organic fruit and vegetable is still a niche segment but is growing quickly • Produces can also command 2x to 3x in price

3• Ready meal serving aging population present an untapped growth opportunity • CPRAM target elderly segment and hospital patients with easy to chew meals such as boiled pork rice with low sodium

4• Halal meal export market also present a significant growth opportunity • Global market estimated to worth $1.6T in 2018 (16% of total global food industry) • In Thailand, there are more than 8,000 factories and over 150,000 products that received halal certification

Sources: Euromonitor, Thai National Food Institute 28 Thailand Packaged Food Manufacturing: Recent PE & VC Investments

Date Targets Acquirer ($US) Stake

09-09-2019 Srithai Daily Foods Navis Capital Partners N/A N/A (Minority) Minority Dusit Thani PCL Investments 03-02-2018 NR Instant Produce Co Ltd $21,06M 25,98%

09-08-2011 S&P Syndicate PCL Minor International PCL (MINT) $11.51M 5.04%

IPOs Valuation Notable acquisitions

Date Targets Acquirer ($US)

Thai Foods 17-06-2019 $9.26M Exits Group

$40.16m raised $4.8m raised corresponding corresponding to 26.09% of to 20% of Nippon Pack 21-07-2016 $2.5M equity equity PCL

Sources: Euromonitor, Pitchbook 29 Recommend to target healthy ready meal, frozen fruits or halal food segment by local producers

Ride the domestic ready meal boom

⮚ Seek small to medium sized manufacture catering to premium urban consumers ⮚ Products offering should focus on premium healthy ingredient that are low in MSG ▪ It is important to identify point of differentiation from market leader such as CP, who offers various selections of ready meal through a strong network of owned convenience stores (7-eleven) ⮚ Consider alternative channels to serve consumers ▪ Several “clean food” players utilize deliver directly to home and offices ▪ Alternatively vending machine at residential condominium is an emerging route to reach young urban consumers

Focus on businesses that export halal, fruits and ingredients to APAC

⮚ Help halal certified manufacturers expand their export market and geography ⮚ Identify processed fruits business with strong distribution partners in and domestic supply chain with growers ▪ Differentiate produce through different processes such as freeze drying, baking or steamed sulfuring ▪ Mango, durian, mangosteen and coconut are the primary exports to China ⮚ Identify manufacturer of ingredients such as seasonings and condiments that are in demand in APAC • Thailand has significant cost advantages as raw materials such as sugar, chilies and spices are locally produced

Sources: Euromonitor, Desktop research 30 Potential target: JM Food, a major frozen and chilled ready meal provider captures both domestic and export market

JM Food provides ready-to-eat Thai meal and ingredients including chilled and frozen meals & fruits, stir-fried kits, sauce, and bakery. The company also offers food catering services and operates food court stalls

Product selection: Diverse product selections that include chilled and frozen meal and fruits. Potential to increase selection of healthy options

Certification and safety standard: Facilities are Name: JM Food Industry Halal and HACCP certified; FDA registered

Business line : Distribution network: Strong domestic 1) Manufacturer of chilled and frozen meal distribution through large discount supermarket. 2) Provide catering services to event and banquet Well known OEM capability for importers. Potential 3) Operate food stalls (food court) to leverage owned-brand for exports and direct distribution to local urban consumers Market: Export 20%/ Domestic 80%

Market potential : JM Food can leverage the Established in: 1982 strong growth trend of domestic healthy meal and international demand of halal food

Sources: JMFthailand.com; Bangkokcompanies 31 Backup

32 Manufacturing is seeing recent growth given global trade wars; Large retail stores are stealing market share from traditional stores

1 2 Manufacturing Large retail stores

Macro factors: Macro factors: • Improvement logistics and real estate; increase consumption • Rapid urbanization; rapid growth of middle-class population due to growing middle class • Wtinessing 11% growth since 2016; ranked 6th best destination • Given current trade wars with China, increased emphasis on for retail investment manufacturing locally for value-added products • Heightened concern factors for food safety and hygiene • International companies (e.g. Samsung) shifting to Vietnam for • 75% still owned by mom and pop stores – ripe opportunity for manufacturing to diversify supply chains growth of chains Business model factors: Business model factors: • High investment multiples in the retail (MobileWorld divested • Risks: Finding qualified professionals to work in the for a 57x return) manufacturing space • Risks: Uncerntainity of government regulations impacts import of food; US products still expensive to middle class HHs because high high import duties

Past deals: Past deals: • 2019: VinaCapital Group (USD 21.4 mn.) invested in Ngoc • 2008: Mekong and Vina Capital (USD 8 mn.) invested in Phu Nghia Industry Nhuan Jewelry • 2016: AIF Capital (USD 15mn.) invested in Rochdale Spears • 2019 and 2020: Mekong and undisclosed investors (USD 30 mn.) • 2016: Stellus Capital Management (USD 6 mn.) invested in T.F invested in Pharmacity Hudgins • 2019: GIZ (USD 500 mn.) invested in WinGroup

33 Education and logistics are growing segments in Vietnam given the high rate of urbanization and shift to middle class

3 4 Logistics Education Macro factors: Macro factors: • E-commerce is growing rapidly and being dominated by • 3rd largest young population; rapid urbanization; 41% population less international players allowing for local companies to help with than 24 years old ‘golden demographic’ logistics • Rising middle class who desire to send kids to international school; new • E-commerce logistics and the industry expected to reach an average decree accepts 50% locals in international schools growth of 42 percent every year until 2022 • Strong desire to excel in the English language • Logistics accounts for 18% of GDP (higher than most countries) with • State-owned universities and colleges only have capacity for 600,000 of scope for improvement the 1.8 million candidates who undertake the national university Business model factors: entrance examination • 100% foreign owned logistics company not allowed under the laws Business model factors: of Vietnam giving room to local players • Lean and capital efficient business models for some of the more • 75% of e-commerce happening in two ciites allowing for focused innovative education platforms logistics opportuniteis • Raised investment level for foreign investors decreasing compeititon of • A series of M&A deals in the logistics industry took place in 2019 investors reflecting consolidation in the industry • Focus areas: International schools, private schools, testing centres, • Risks: Primairly cash-based economy limiting use of online logistics online education platforms platform; • Risks: High taxation; complicated entry barriers for investors Past deals: Past PE deals: • 2016: Mekong invested in ABA Cooltrans • 2017 and 2019: Mekong (USD 4.9 mn.) and Kaizen (USD 10 mn.) • 2016: Bravia Capital invested in Bac Ky Logistics invested in Yola • 2017: Mekong invested in Nhat Tin Logistics • 2017: LBO by TPG in Vietnam Australia International School • 2019: Navis Capital buyout of Than Than Cong education platform 34 Opportunity for Thai food manufacturer to serve the growing Asia Market; Rising middle class and tourists drive F&B demands

1 2 Manufacturing (especially in food) Food & Beverage & Hotels

Macro factors: Macro factors: • Rich natural resoruces and raw material (80% of raw material • Tourism has been the fastest growing sector with revenue from is locally produced) forist tourist representing a CAGR of 16.5% from 2009 to 2018 • Supportive skileld labor resource • Food Retail has experienced a tremendous growth • $45B governemnt investment in Eastern Economic Cooridor. $15B is dedicated to transforming manufacturing industries • Large active corporate accquirers such as Thai Beverage and Minor international Business model factors: Business model factors: • Producing of healthy, functional (eg high-fiber) or specialty food • Tap into rising urban consumer spending power: upper end (halal) coffeeshop and restaurants, driven by western food trend • Production of high valued added food such as organic fruits, dried/frozen fruits • Target facilitates for foreign food corporates for expansion in SE Past deals: Asia. • 2019: Bonchon (Chicken Time) was acquired by Minor International for $63 M • 2019: Santa Fe Steakhouse was aqquired by Boonrawd Brewerly Past deals: for $50 M • 2019: BTM Thailand was acquired by Breaktalk for $5.14M • 2019: MK Restaurant Group acquired in early September a 65% • 2018 Mighty International was acquired by Frutarom stake in Laem Charoen Seafood for ~700M Industries for $20M to expand capabilities in Asia • 2017: Express Food (Restaurant operator) received $15M from • Other startup:… Lombard capital (PE firm) • Other startup: Hungry Hub (A), Happy Fresh(C) ,Eatigo (B) 35 Internet-based businesses have the highest potential in Indonesia, market not saturated yet

1 2 Fintech lending (specifically B2B) Online Gaming (specifically mobile)

Macro factors: Macro factors: • E-Payments market has grown at 15-20x over last 5 years • Increasing time spent by people on social media • CC penetration is quite low • Rising internet penetration outside of Java • Regulatory environment is becoming more favorable

Business model factors: Business model factors: • Fintech loans are quite low in terms of overall transaction volume • Content/development side of gaming has high potential; high • Fintech ecosystem is broken for B2B – not many lenders margins • Small gaming revenue relative to population, low penetration

Past deals: Past deals: • 4 major players exist in the e-money space right now: Ovo, • xx Gopay, Dana, Linkaja. ShopeePay is emerging as the 5th player • 100+ Fintech players for B2B lending, no clear leader

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