Village Grocer Sdn Bhd (VGH) made headlines recently when they announced their acquisition of a 100% stake in Ben’s Independent Grocer Sdn Bhd (B.I.G) from The Big Group Sdn Bhd, a fellow local grocery chain.
VGH had released a statement claiming the acquisition would further strengthen its position as one of the leaders in the premium grocery segment by increasing their total outlets to 13 with a combined annual revenue of approximately RM560mil.
Ben’s Independent Grocer has been running since 2011, with three B.I.G outlets located in Kuala Lumpur: Publika Shopping Gallery, Plaza Batai and Glo Damansara.
The value of the overall transaction has not been disclosed.
Although VGH acquired B.I.G, the two brands will continue to be run by their present management teams and they will remain existing as two separate brands.
VGH group executive chairman, Ong Kim Too, said in an interview, “The acquisition of B.I.G is a strategic business decision that fits in very well with the company’s long-term growth and expansion plans within the premium grocery market. With this acquisition, we have an opportunity to extract procurement and operational synergies to better serve a growing market segment.”
The Big Group on the other end saw this as a divestment of the retail grocery business as it would enable them to focus on growing the food and beverage business, which owns a stable of brands under its umbrella including Plan B and Ben’s restaurant chain.
As to how they could have potentially made this acquisition, here are 3 steps that might have helped with VGH gearing up towards this move.
1) Investments By A Key Player
The first big step that VGH received was when they received stake from private equity firm (PE), Navis Capital Partners.
Navis Capital first bought a majority stake in VGH back in September 2014 from Ong Kim Too and his family. This PE firm then also took interest in Big Group as a few months after that, they bought a stake in Big Group too.
The firm was one of the first to show strong interest in consumer-related businesses. Navis Capital was also reported to be a bidder for a stake in Jaya Grocer, which also gained interest from CIMB Private Equity and Mitsubishi Corp.
This further strengthened their hold in Malaysia.
2) Becoming Anchor Merchants
A way for any proper supermarket brand to make a presence is by becoming anchor tenants inside residential areas, shopping malls and such. Village Grocer has been securing deals whereby they were named as anchor merchants for a variety of areas, including those outside of Klang Valley.
Some of the notable ones that occupy over 25,000 square feet include:
- M City Jalan Ampang
- Melawati Mall that will be launched in the second quarter of 2017.
- 1 Mont’ Kiara Retail Mall
- Medini Mall, Johor Bahru
3) Expansion Into Other Areas
Since its founding days back in 2004, Village Grocer has expanded into various parts of Klang Valley. After its first outlet in Bangsar Village mall, VGH has now grown to 10 outlets to date with plans on adding more throughout the year.
Two of the more recently opened outlets can be found at MyTOWN Shopping Centre in Cheras and KL Gateway Mall in Bangsar South. Ong Kim Too mentioned that VGH plans to open a few more outlets in the Klang Valley and other locations over the next 18 months under the Village Grocer and B.I.G brands.
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