CP Group to buy back Tesco unit after two decades

March 16, 2020 13:25
Thailand's CP Group manages to generate stable cash flow from its agri and retail businesses despite the coronavirus outbreak. Photo: Reuters

Charoen Pokphand Group, Thailand's biggest agribusiness conglomerate, has agreed to pay US$10.6 billion to acquire British grocer Tesco's Asia business.

What this really means is that the Thai group is taking back the business into its fold, as it had earlier sold the operations to Tesco for US$180 million amid liquidity stress following the Asian financial crisis.

Interestingly, the group operates under the name Chia Tai Group in mainland China, but is widely known as the Charoen Pokphand Group in Thailand and other parts of the world.

The CP Group traces its beginnings to a small seed shop named Chia Tai established in 1921 in Bangkok’s Chinatown by Chinese brothers, Chia Exchor and Chia Seow Nooy.

In 1953, Dhanin Chearavanont, or Chia Kok Min, took over the family business and expanded into local consumption business.

In 1979, the CP Group was the very first foreign investor to set up a joint venture in China.

Currently, CP Group has two main business units. One is based in Thailand, mainly focusing on animal feed, agriculture, retail, telecom, finance and property in Southeast Asia. Another unit focuses on Great China, making investments through joint ventures or stake purchases.

In 2012, CP Group acquired 15.6 percent stake in Ping An Insurance from HSBC, making it the largest shareholder of China’s largest insurance firm. In 2015, it acquired 20.6 percent stake in CITIC for HK$80.3 billion together with Japanese trading house Itochu Corp.

The latest deal highlights the retreat of Tesco from Southeast Asia. Last month, the British firm sold its 20 percent stake in a joint venture to the Chinese partner China Resources Holdings for HK$2.8 billion.

Currently, CP Group has interests in over 10,000 retail stores across Southeast Asia, under a number of brands including 7-Eleven, Fresh Mart, Wal-Mart and Siam Makro.

Despite the worsening coronavirus outbreak, the Thai group still manages to generate stable cash flow from its agri and retail businesses.

The conglomerate now has over 300,000 employees worldwide, with annual revenue over US$60 billion. The family has a net wealth of US$36.6 billion, and has been the richest family in Thailand for years.

This article appeared in the Hong Kong Economic Journal on March 13

Translation by Julie Zhu

[Chinese version 中文版]

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RC

Hong Kong Economic Journal columnist