Vietnam’s largest property developer Vingroup, through its subsidiaries, has invested more than VND10 trillion ($467.7 million) in merger and acquisition (M&A) deals, last year.
This was revealed in the company’s financial statement for 2014, which has released today.
Most of the M&As were to consolidate its core function of real estate but some of the largest deals were carried out to facilitate company’s diversification into other sectors, including retail and ports.
The biggest deal was the VND3.33 trillion ($155.7 million) acquisition of 74.38 per cent stake in the realty firm Tan Lien Phat, which is the owner of the VND30 trillion ($1.4 billion) Vinhomes Tan Cang project.
Prior to this transaction, a Vingroup subsidiary, Vincom Retail had acquired a 30 per cent stake in Tan Lien Phat.
In addition, Sai Dong Urban Development and Investment (SDI), in which Vingroup owns 94 per cent, spent VND2.3 trillion to purchase 99 per cent in Hanoi-based Hong Ngan Real Estate Company. The company owns two major projects in the capital city with the total investment of VND8.9 trillion.
One of Vingroup’s most remarkable acquisition was buying of 70 per cent stake in the Ocean Mart from financial conglomerate Ocean Group‘s and renaming it as VinMart. The value of the share transfer was VND560 billion. Meanwhile, Ocean Retail’s charter capital at the time of the transaction was only VND300 billion. This deal was clearly a profitable business for both sides.
Besides, the Forbes billionaire’s company invested over VND1 trillion to take over Khanh Gia Investment Trading Services, Riverview Da Nang and Vincom Construction Co Ltd. The holding increase in SDI from 20 per cent to 94 per cent was also implemented last year.
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Two other smaller deals, in terms of the stakes, were buying of 10 per cent stake (VND552 billion) in the Vietnam National Textile and Garment Group (Vinatex) during its initial public offer, and 13.1 per cent (VND152 billion) stake in Dai Duong Thang Long JSC venture of the Ocean Group and Vietnam’s construction corporation Vinaconex.
Vingroup also plans to develop e-commerce business, starting by establishing VinEcom, where it owns 70 per cent (VND318 billion).
The group’s M&A activities are expected to continue in 2015 as it is looking at opportunities emerging from the equitisation of state-owned companies. Thirty-five per cent of Nha Trang Port and 80 per cent of Giang Vo Exhibition Centre, which will conduct IPO tomorrow, are likely to be the first two deals for the year.
If its proposal to gain controlling stakes in Hai Phong and Saigon Port is approved, its logistic business vertical will be much more influential.
Ending the fiscal year of 2014, Vingroup’s revenue jumped 51 per cent year-on-year to more than VND27.7 trillion, and its net profit (excluding interests from financial operation of share transferring) reached VND3.7 trillion, increasing 27 per cent.