Warburg Pincus-backed Vincom Retail seals $709m Vietnam IPO
Warburg Pincus has secured its first partial exit in Southeast Asia after Vietnam-based shopping mall operator Vincom Retail raised VND16.1 trillion ($709 million) in its IPO.
The company sold 396.5 million shares at VND40,600 apiece, representing the top end of the indicative range, according to a source familiar with the situation. It values Vincom Retail at VND77.2 trillion. A group of cornerstone investors, including Dragon Capital and GIC Private, agreed to cover 58.8% of the offering. The stock is scheduled to begin trading on November 6.
The IPO – the largest ever seen in Vietnam – initially involved 380.2 million shares, all held by Warburg Pincus, Credit Suisse, and five individuals. Prior to the offering, the selling shareholders owned 27% of Vincom Retail, while property developer Vingroup had 58.9%.
A Warburg Pincus-led consortium invested $200 million in the company in 2013 for a 20% stake and then contributed another $100 million in 2015. The following year, Vingroup injected $390 million into the business. Warburg Pincus has exited about two-thirds of its stake through the IPO.
Vincom Retail claims to be Vietnam's largest shopping mall developer, with a 60% market share in Ho Chi Minh City (HCMC) and Hanoi. Retail space per capita in these cities is still only about one-seventh that of Jakarta or Manila. Sales through retail outlets in Vietnam as a whole came to $52.6 billion in 2016 and the total is projected to reach $66.5 billion by 2020.
Vincom Retail was incorporated in 2012 and Vingroup transferred three properties into its portfolio in 2013. As of June, the company owned and operated 40 malls across 21 cities with a total retail gross floor area of more than 1.1 million square meters. It had a further 73 identified pipeline projects and wants to reach 200 malls by 2021.
When Warburg Pincus made its first investment, Vincom Retail had seven malls – including two that were scheduled for launch – valued at about $1.1 billion. The aim was to build 25-30 new properties over 4-5 years, expanding the company's footprint from HCMC and Hanoi into second-tier cities.
This was the PE firm's first deal in Vietnam. Since then, it has entered into a joint venture with VinaCapital to develop hospitality assets in the country. Warburg Pincus has six investments in Southeast Asia and has committed more than $1 billion in equity in the region.
Other portfolio companies include ride-hailing and delivery platform Go-Jek and Trax, a Singapore-based start-up that uses visual technology to help retailers link sales to where products are positioned in stores.
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