CapitaLand launches first $300m Vietnam private equity fund

Photo: Reuters

Singapore-listed CapitaLand Limited has closed its first commercial vehicle in Vietnam – CapitaLand Vietnam Commercial Fund I (CVCFI) – at $300 million, a fund size that is set to bring CapitaLand closer to the towering target to expand its assets under management (AUM) to $7.34 billion (S$10 billion) by 2020.

The fund will invest in Grade A commercial real estate in Vietnam and have a life span of eight years, with CapitaLand holding a 40 per cent stake in CVCFI. The remaining 60 per cent is held by major institutional investors, the firm said in an announcement.

This fund in Vietnam, also CapitaLand’s third largest market in Southeast Asia, follows the launch of its other major private equity (PE) partnership, the $1.5 billion-Raffles City China Investment Partners III, which invests in prime integrated developments in gateway cities in China.

Lim Ming Yan, President & Group CEO of CapitaLand Limited, said: “Scaling up in the real estate sector requires strong financial capacity and flexibility. By proactively working with reputable capital partners to build scale, we can be nimble and react fast to seize growth opportunities. We see increasing investor interest in Southeast Asia, in particular, Vietnam.”

“They want to invest in the country through CapitaLand given our deep local platform and execution capabilities. CapitaLand is positive about the growth trajectory of Vietnam and foresees that this trend will continue for at least the next 10 years,” he added.

With a growing demand for residential properties with urbanisation, there is a strong potential upside in Vietnam’s commercial real estate sector due to the mismatch between demand and supply of quality office space.

The last few years have seen CapitaLand establish a footprint in key gateway cities of Vietnam like Ho Chi Minh City and Hanoi. According to the media release, the company plans to leverage its “developer-owner-operator capabilities, strong fund management expertise and harness synergies across asset classes” to to drive higher risk- adjusted returns for its investors.

Vietnam is the third largest market for CapitaLand in Southeast Asia, after Singapore and Malaysia. The firm has nine residential developments, 22 serviced residences with over 4,700 units and one international Grade A office development across six cities in Vietnam.

The country has been the focus for CapitaLand in recent years; in January it acquired and developed an office tower in the central business district of Ho Chi Minh City. It has also partnered with Vietnam’s largest co-working space operator, Toong, which opened its first location in Ho Chi Minh City at CapitaLand’s The Oxygen mall.