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DealStreetAsia

KKR-led consortium invests $650m in Vietnam's Vinhomes

Group will own a 6% stake while Vingroup will keep control of the housing arm

An apartment complex developed by Vingroup in Hanoi: The real estate sector has drawn heavy interest from overseas private equity funds and Singapore's state investor.   © Reuters

HANOI -- A consortium led by U.S. private equity powerhouse KKR that includes Singapore's state investor Temasek Holdings, announced Tuesday that it isinvesting $650 million in Vinhomes, the housing development arm of Vietnamese conglomerate Vingroup.

The stake purchase will give the consortium 6% of Vinhomes, while Vingroup will remain 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," said 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 Vietnam's biggest-ever initial public offering. The real estate business is currently listed on the Ho Chi Minh City Stock Exchange, home to the country's largest stocks, and has a market value of $10.6 billion. Singapore sovereign wealth fund GIC was a pre-IPO investor in Vinhomes.

The Vietnamese property developer recorded a net profit of more than 6.8 trillion dong ($295.5 million) in the first quarter of this year, soaring 169% on the year, despite the novel coronavirus pandemic. The company has set a full-year net profit target of 31 trillion dong this year, up 27% versus 2019.

Vingroup is Vietnam's second-biggest company in terms of market capitalization, at $13.3 billion. The group and its business units are among the country's best funded companies and have raised large sums from international investors.

Last year GIC injected $500 million into Vingroup's retail arm, VCM Services and Trading Development, before the conglomerate merged with compatriot Masan Group. GIC is also an investor in Masan.

In 2019, Vingroup also bagged a $1 billion investment from South Korea's SK Group in exchange for a 6% stake.

GIC is also an investor in Vincom Retail, a shopping mall developer that is part of Vingroup. The unit is also backed by Warburg Pincus, which invested a total of $300 million in the company.

Temasek's investments in Vietnam include a stake in the country's lone unicorn, logistics specialist VNG, and in SCommerce, a startup in the same industry. The Singapore investor is pouring capital into the real estate sector in Southeast Asia, including Vietnam, through a $2.5 billion project with Japan's Mitsubishi Corp.

Vietnam's property sector, especially the apartment segment, is expected to see stable growth despite the coronavirus pandemic, thanks to the country's rising urban population, according to industry observers.

In addition, Savills Vietnam said in its first-quarter report this year that there is increased foreign interest in high-end properties in Vietnam, with 30% of project quotas already taken up. "This trend is expected to continue in well-located, premium projects by reputable developers," the company added.

For the original story from DealStreetAsia, click here.

DealStreetAsia is a financial news site based in Singapore that focuses on corporate investment activity in Southeast Asia and India. Nikkei owns a majority stake in the company.

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