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Vietnamese developer raises fresh capital for affordable housing

Newly listed Vinhomes becomes country's second-most valuable company

Vingroup is building this Vinhomes Metropolis apartment complex in Hanoi.   © Reuters

HO CHI MINH CITY -- Vinhomes listed on Vietnam's main stock exchange Thursday and immediately jumped to second place in value, reflecting the prospects for the affordable housing market in one of Southeast Asia's fastest-growing economies.

With strong investor appetite, Vinhomes' market capitalization hit 296 trillion dong ($13 billion) on the Ho Chi Minh City Stock Exchange, making it the second-most valuable listed Vietnamese company after its own parent, Vingroup, at 324 trillion dong. Vietnam Dairy Products (Vinamilk) follows at 239 trillion dong.   

More than 2.68 billion Vinhomes shares were listed on the bourse Thursday, offered at 92,100 dong apiece. During the opening session, 10,800 shares changed hands at 110,500 dong, 20% higher than the offering price. 

The successful listing is supported by growing demand for housing as urbanization accelerates in Vietnam. 

Vingroup is the biggest shareholder in Vinhomes, with a 69.66% stake as of April 20, followed by Singapore sovereign wealth fund GIC with 5.74%. In April, Vingroup raised $1.3 billion from GIC for property investment.

Two foreign investors held more than a 7% stake at Vinhomes before the listing, leaving room for additional foreign ownership under a 49% cap. 

Vinhomes offers both high-end and affordable homes. Its Vinhomes brand is geared for high- and middle-income buyers, while the new Vincity line targets lower earners. Unit sales under Vincity are scheduled to start later this year, providing 200,000 to 300,000 units to the market by 2020. Prices start at 700 million dong per unit.

Listing on the stock market will improve the company's ability to raise funds for new projects, said Vinhomes CEO Nguyen Dieu Linh. Besides 10 projects under construction, Vinhomes will need capital to fund 26 new projects by 2021, including eight Vincity projects.

Affordable housing is the most promising segment for Vinhomes as the demand is increasing while the market currently lacks major providers, Le Anh Tuan, head of research at Vietnam-focused Dragon Capital, told the Nikkei Asian Review at the listing ceremony. Dragon Capital was one of four institutional investors in Vinhomes before the listing.

An estimated 80% of potential Vietnamese homebuyers are searching for affordable units.

In 2016, Vingroup announced it would enter the affordable housing segment after the government warned the housing industry it would tax owners of second homes in order to tackle an oversupply of high-end homes in the market. 

Hanoi-based Vinhomes was founded in 2008 and reorganized by parent Vingroup in 2018. Vingroup has diversified into seven core business segments -- real estate, retail, tourism, education, health care, agriculture and automobiles -- becoming one of the biggest private conglomerates in Vietnam.

Vinhomes reported 15.2 trillion dong in revenue last year. This figure is expected to increase 61% to 24.6 trillion dong this year and jump 226% to 80.3 trillion dong in 2019. Net profit for 2018 is forecast at more than 5 trillion dong and expected to quadruple to 20 trillion dong next year.


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