Givaudan and Deutsche Bank win Vietnam regional accolade at The Asset Triple A Awards
Deutsche Bank’s FX and escrow solution for Givaudan, a Swiss-based manufacturer of flavours, fragrances and active cosmetic ingredients, enjoyed the sweet smell of success with Best Payments and Collections Solution in Vietnam award at The Asset’s Triple A Treasury, Trade, Sustainable Supply Chain and Risk Management Awards 2020
With around 25% of global market share, Givaudan is the world's largest company in the flavours and fragrances industry. It is also one of Switzerland’s 30 biggest listed companies in terms of market capitalisation, with a major presence in the Middle East, North America, Latin America and Asia Pacific.
Growth of Givaudan
In 1768, in Grasse, France, Antoine de Chiris first converted flora and fauna into the first ingredients for perfumery and over the next 250 years what became Givaudan grew into a global business, reported in 2019 to be worth CHF 6,203m (€5.82bn).1
Since the Covid-19 crisis emerged, the company has been one of a number of core producers to keep food supply chains moving as the additives are important components in frozen foods, soups, snacks and nutritional products.
“Our business plays an important part in the global response to the pandemic,” said CEO Gilles Andrier on 27 March 2020.2 “Our creations go into products which are critical to protecting health and containing the spread of the virus including soaps, household cleaning products and disinfectants. In addition, we are producing hand sanitiser to protect our employees and donating what we can to medical facilities near to where we operate.”
In recent years, Givaudan has embarked on a series of strategic acquisitions around the world; in 2019 these included Vietnamese flavour company Golden Frog – Flavor & Fragrance Co Ltd. This purchase was a key move for Givaudan, which Monila Kothari, the company’s APAC Regional Commercial Head described as strengthening the company’s naturals capabilities and presence in Asia Pacific’s high-growth markets and providing an even greater product offering for its customers.
The right blend
Integrating the newly-acquired company into the Givaudan set-up was a highly complex exercise, not least because of the local regulation covering the movement of funds from Givaudan’s head office to its Vietnam subsidiary. It meant that Givaudan was looking for a trusted partner who could commit to finding solutions. The longevity of the relationship between Deutsche Bank Vietnam, particularly through its FX services, made the Bank a natural choice.
From mid-March 2019, discussions between Givaudan and Deutsche Bank developed around the journey of funds from the parent company in USD through to the newly-acquired Golden Frog – Flavor & Fragrance Co so that local Givaudan sellers could be paid securely in dong (VND). Vietnam FX exchange control regulations require all incoming indirect investment to be converted into local currency.
Another issues was that Givaudan felt more comfortable working via escrow accounts to pay their sellers – in other words a trusted third party (such as Deutsche Bank) holds the funds in a trust account on an agency basis.
An innovative solution was developed that packaged capital account, escrow agent, foreign exchange and cash settlement solutions into one service where flow of funds from USD to VND were compliant with local regulations for holding an indirect investment account. It was this aspect that attracted the attention of The Asset judges and resulted in the 2020 Regional Best Payments and Collections Solutions award for Vietnam.
Full transparency of the deal flows were made available at each of these stages:
- Payment from Givaudan Head Office to Givaudan Vietnam
- Conversion of USD to VND and deposit in indirect investment account
- Payment from indirect investment account to escrow account managed by Deutsche Bank for Givaudan; an
- Payment from escrow account to onward Givaudan sellers in VND.
The process demonstrated how “simplified and straightforward transaction” in fact lent itself to value creation and efficiencies delivered by such a bespoke solution with many elements automated to save time and cost. In addition, turnaround time and service quality remained critical throughout.
Not only was the longstanding and close relationship between Givaudan and Deutsche a deciding factor, but its strong footprint in the local Vietnam market were reasons why Deutsche Bank was selected as the sole banker.
As a member of major electronic clearing systems, and advanced FX automation platforms, Deutsche Bank made it possible to reduce manual workloads for Givaudan – especially important given there are three locations involved in managing the transactions: Switzerland, Singapore and Vietnam.
Perhaps the key point of differentiation, however, was that Deutsche Bank offered a single relationship manager who coordinated the entire process with offshore and onshore stakeholders for onboarding, Know Your Customer (KYC) as well as a tailored solution comprising all relevant products groups. This feature proved to be particularly beneficial for the client in reducing the workload through efficient external and internal coordination.
Good collaboration among the stakeholders made it possible for Deutsche Bank to support Givaudan on the optimal transaction structure and flow, enabling it to complete the closing of the acquisition ahead of an already tight deadline. In other words, the cash management solution was in place ready for the newly-acquired entity to start trading with its sellers. This central co-ordination – bringing together different products and stakeholders – ensured both the smooth running of the project and the awards success that followed.
Burkhard Ziegenhorn, Head of South-East Asia (ASEAN Countries) GTB and Corporate Bank Coverage Deutsche Bank explains, “We were so pleased that Givaudan was honoured with The Asset’s ‘Best Payment and Collections Solution in Vietnam’ this year and that we could help. Automating as much as possible in a compliant, secure and timely manner is top of the corporate treasury wish list and it is down to banks such as us to make this happen.”
The Asset Triple A Awards are held annually and recognise industry excellence across various categories on a country and regional basis. This year’s winners were announced in June 2020 on The Asset’s website.