South Korean conglomerate Lotte Group is expanding its footprint in the Vietnamese real estate market by acquiring minority stakes in businesses that have operations in the country, according to a Korea Herald report.
Lotte Asset Development will buy a 10 per cent equity interest in Lotte Properties (Hanoi) Singapore for 16.32 billion won ($14.43 million), to develop and manage real estate assets in Hanoi, the report cited a company announcement on October 21. The report stated that other Lotte affiliates and local partners will take over the remaining 90 per cent.
DEALSTREETASIA could not independently verify the announcement.
Along with the move to boost its presence in Hanoi, Lotte will also purchase 10 per cent of another company to manage properties in Ho Chi Minh City. Deal value is reported to be pegged at 22.3 billion won.
The acquired business will act as the main developer of Lotte’s $2-billion eco-smart city project of 100,000 square m with facilities including shopping mall, offices, hotels, serviced residences and apartments.
In Hanoi, Lotte has already invested $400 million to build Lotte Centre Hanoi, which is its first overseas multi-purpose complex.
The announcement comes suspicion that Lotte Asset Development reportedly acquired tax haven Luxembourg-based Coralis SA to buy land and apply for investment license for the Hanoi complex.
Its affiliates, Lotte Shopping and Hotel Lotte, then bought 45 per cent of Coralis SA, which was said to be the vehicle for offshore tax evasion by Kim Seon-yong, the third son of former Daewoo chairman Kim Woo-jung, before the paper company was sold to Lotte Asset Development in 2009.
The allegation arose that Lotte was funneling money to a slush account, as Coralis SA posted a 55.1 billion won loss in 2015, a year after the Lotte Centre Hanoi was completed.
“Buying companies that have local business licenses is a common practice when pursuing projects overseas,” Lotte Group said in response to the accusation.
Historically, Lotte has acquired major stakes at Diamond Plaza and Legend Saigon Hotel, and was speculated to take over retailer Pico Plaza, all in Ho Chi Minh City.
Vietnam has also seen several other big developments sold to Korean investors, including the Keangnam Landmark Tower, Hanoi’s tallest building, to AON Holdings. The 65-storey Lotte Centre Hanoi is the second tallest in the city.