Fresh off the announcement of his company’s latest acquisition, Rithy Sear, chairman of the WorldBridge International Group, said he was looking to close the net on competition as he works to cement his company’s position as the Kingdom’s supply chain leader.
“We are purchasing groups and signing deals so that we can dominate the logistics industry while laying the groundwork for the many subsidiaries under WorldBridge International,” Sear said, adding that to push a diverse portfolio of interests, it was important to “shake a lot of hands with different groups”.
On Sunday, WorldBridge announced that it had acquired a majority stake in AusKhmer Import and Export Company Ltd, one of the biggest distributors of high-quality food and beverage products in Cambodia.
The buyout for an undisclosed sum aims to leverage Sear’s growing logistics empire to serve and develop AusKhmer’s high-profile client list, including five-star hotels, restaurants and supermarkets.
Sear, whose group is engaged in logistics, real estate and e-commerce, has also pledged to sink $10 million into expanding AusKhmer’s business and bringing in more famous foreign food and beverage brands.
The buyout was the latest in a series of acquisitions and partnership deals that have catapulted WorldBridge into the media spotlight. Much of this activity has come through Kerry WorldBridge Logistics Ltd, a joint venture between Sear’s firm and Hong Kong-listed Kerry Logistic Network Ltd.
In February 2015, Kerry WorldBridge acquired the majority share of the local door-to-door logistics firm Cambodia Express Group. More recently, it signed a memorandum of understanding with state-owned Cambodia Post, agreeing to invest $17 million to expand the coverage of its Express Mail Service (EMS) and increase the use of the country’s post offices.
The deal not only extends the logistics reach of both partners, it gives WorldBridge’s MAIO Mall e-commerce platform more capacity to distribute packages to customers.
“We can now reach into places that we couldn’t before,” Sear said of the shared-services arrangement.
Kerry WorldBridge has also invested in its own special economic zone (SEZ), a $100 million project aimed at building a regional logistics hub in Kandal province just south of Phnom Penh.
Expected to begin operation later this year, the project includes a bonded warehouse that would enable companies to import materials duty-free for their export-oriented production lines.
It is all part of Sear’s holistic approach to logistics.
“To me logistics is the way of the future, and in Cambodia many companies don’t understand the market or the value of managing the whole supply chain,” he said, estimating that his firm had spent somewhere between $70 million and $129 million in the last few years to firm up its position as a leader in Cambodia’s logistics sector.
The consolidation is helping to shake up the highly fragmented Cambodian domestic logistics sector.
According to Noun Ratana, sales and marketing manager for RDL Logistics, more than 600 logistics companies currently operate in the Kingdom – many of them scattered amongst different niche markets transporting different goods.
“In terms of the supply chain, it is very important to operate the whole thing,” he said. “However, most logistics companies in Cambodia lack that [ability] of professionalism. Only a few companies have been able to operate well.”
As for WorldBridge’s aggressive push into the market, Joseph Lovell, managing partner at law firm BNG Legal, said that with Cambodia’s small market, numerous participants and explosive growth, consolidation was both sensible and inevitable. He explained that acquisitions allow companies to expand quicker and cheaper than through organic growth.
“In the big picture, mergers and acquisitions make a lot of sense in Cambodia because you don’t have to legally set up a joint venture to operate,” he said. “From a market standpoint, if a company is looking to get into food and beverage or logistics, you look for an established partner within the industry.”