A consortium led by private equity powerhouse KKR, which includes Singapore’s state investor Temasek Holdings, is investing $650 million in Vinhomes, the housing development arm of Vietnamese conglomerate Vingroup.
With this, the consortium will own a 6 per cent stake in Vinhomes while Vingroup will continue to be the controlling shareholder.
KKR is making the investment primarily through its Asian Fund III, according to a statement.
“Today’s announcement further underscores our strong commitment to Vietnam, where KKR has been active and present for nearly a decade,” commented Ashish Shastry, co-head of private equity for the Asia Pacific and head of Southeast Asia at KKR.
In 2018, Vinhomes raised $1.35 billion in what was then the biggest IPO. The real estate business is currently listed on the Ho Chi Minh City Stock Exchange, home to the country’s largest stocks, at a $10.6 billion market cap. Singapore sovereign wealth fund GIC was a pre-IPO investor in Vinhomes.
The Vietnamese property developer recorded a net profit of over 6.8 trillion dong ($295.5 million) in Q1 2020, soaring 169 per cent year-on-year despite the COVID-19 pandemic. It is targeting a full-year net profit of 31 trillion dong this year, up 27 per cent compared to 2019.
Vingroup itself is the second biggest local company in terms of market cap at $13.3 billion. The group and its business units are amongst the most funded companies in Vietnam and have raised large sums of capital from international investors.
Last year, GIC injected $500 million in Vingroup’s retail arm, VCM Services and Trading Development, before the conglomerate merged the business with Masan Group. GIC is also an investor in Masan Group.
In 2019, Vingroup also bagged a $1 billion investment from South Korea’s SK Group in exchange for a 6 per cent stake.
GIC is also an investor in Vincom Retail, a shopping mall developer under Vingroup. The unit is also backed by PE major Warburg Pincus, which invested a total of $300 million in it.
Meanwhile, Temasek’s investments in Vietnam include the country’s lone unicorn VNG and logistics startup SCommerce. The Singapore investor has been injecting capital in the real estate sector in Southeast Asia, including Vietnam, through a $2.5 billion project with Japan’s Mitsubishi.
Vietnam’s property sector, especially the apartment segment, is projected to witness stable growth regardless of the ongoing global health crisis, thanks to the country’s rising urban population, according to industry observers.
In addition, Savills Vietnam said in its Q1 2020 report that there was increased foreign interest in high-end products, with 30 per cent of project quotas already taken up. “This trend is expected to continue in well located, premium projects by reputable developers,” the firm added.