A majority stake of Mongolian conglomerate MSM Group has been acquired by Singapore-headquartered industrial company, Jebsen & Jessen Group, according to a MSM Group announcement.
The transaction marked the foreign takeover of a leading Mongolian conglomerate under a private deal, with full details undisclosed.
MSM is one of the leading conglomerates in Mongolia, with businesses spanning across industrial, automotive, chemical, agriculture, and beverage. It remains a sole distributor and partner for over 50 international brands in the Mongolian market, including BYD, Mercedez-Benz, Red Bull and Bosch.
The decision to sell came as “continuous re-investments” were needed to fund the growth of MSM in Mongolia, and the founders decided to search for a family business with capital strength and international presence to take over, according to a September 2 press release.
The search for a family business such as Jebsen & Jessen was intentional and “has taken some time", a spokesperson for MSM explained to FinanceAsia. The spokesperson added that family-owned businesses don’t have quarterly reporting pressures for public shareholders, and therefore can take much longer views when deciding investment opportunities and a timeframe for expected anticipated returns.
MSM’s two founders, Laurenz Melchers and David Reiner, will remain as shareholders under the new structure, according to the press release. In addition, Mark Gabel, current chief executive officer (CEO) of MSM, will join as one of the shareholders.
The spokesperson also confirmed that Mongolia Opportunities Fund, a close-end private equity fund focussing on Mongolian market, also an existing major backer of MSM, has exited the new shareholding structure.
Founded in 1998, MSM has over 650 employees, and operates showrooms, workshops, warehousing facilities and sales outlets in the central area of the capital city Ulaanbaatar, as well as South Gobi and other areas of Mongolia.
The acquirer, Jebsen & Jessen, operates across cable, garnet, ingredients, life sciences, packaging, among other segments, with a large presence in Southeast Asia (SEA). MSM has served as a distributor of its products in Mongolia for over a decade, in addition to family business connections between the two companies that made them “so stranger to each other”, according to the release.
This also marks the third acquisition by Jebsen & Jessen in six months, following the purchase of two Australian businesses: GMA Garnet, and dock products and lifting solutions company Safetech, as it seeks to expand beyond SEA. MSM will become Jebsen & Jessen’s seventh business unit.
Once the deal has been fully completed, MSM will continue to operate under its current company name and leadership, maintaining commercial presence with operations proceeding as usual, the press release noted.
“MSM Group’s leading market position in Mongolia, its strong management team and workforce, and its diverse businesses will be a valuable addition to our portfolio,” said Per Magnusson, Jebsen & Jessen’s group CEO.
LCA Solutions, a Hong Kong regulated multi-family office, acted as financial advisor to the founders of MSM. WS Chong & Co in Hong Kong, Mishcon de Reya in London, and Melville Erdenedalai in Ulaanbaatar acted as legal advisors for different founders. Herbert Smith Freehills in Hong Kong acted for Mongolian Opportunities Fund.
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