KKR, Temasek commit $650m to Vietnam property developer

The private equity firm is primarily committing capital from its third Asian private equity fund, which closed at $9.3 billion in 2017. The consortium – which also includes Temasek Holdings – will take a 6% interest in Vinhomes. The company’s stock closed at VND74,900 on June 16, up 7%. As of midday on June 17, it was trading at VND76,600.

Vinhomes raised VND1.35 billion in its IPO – the largest ever seen in Vietnam – selling shares at VND114,700 apiece. Singapore’s GIC Private invested prior to the offering, paying $853 million for an approximately 7% interest.

The company is a subsidiary of Vingroup, the largest private enterprise in Vietnam. Vinhomes builds residential, commercial, and industrial real estate projects and provides property management services. Vietnam saw a sharp drop in condominium sales in Hanoi and Ho Chi Minh City during the first quarter of 2010 due to the COVID-19 outbreak, although pricing remained stable. Vinhomes resumed construction and marketing in late April as social distancing rules were eased.

Vietnam appears to have dealt with COVID-19 more effectively than any other Southeast Asian country. Its partial lockdown and targeted testing, quarantining and track-and-trace program have helped a population of some 100 million limit infections to 300. No deaths have been associated with the virus. The IMF projects Vietnam will post GDP growth of 2.7% this year, the strongest in Asia. However, economists warn that the country’s reliance on exports could prove a vulnerability.

Vinhomes had a land bank of 153 million square meters in gross floor area as of March, mostly in Hanoi, Ho Chi Minh City and the northern province of Quang Ninh, which is expected to be a focus of future infrastructure development. Revenue came to VND51.6 trillion in 2019, up from VND38.7 trillion a year earlier, while net profit rose from VND14.8 trillion to VND24.3 trillion. The company sold more than 60,000 units in 2019, up 296% year on year.

The company generates almost all its revenue from property sales but it is trying to develop recurring income streams through commercial and industrial leasing. Other initiatives include the application of technology to property sales and management. Earlier this year, Vinhomes launched its own e-commerce platform that allows prospective buyers to browse properties, calculate payment and loan options, and make purchases.

“We are truly honored to have the opportunity to invest in a successful, leading business like Vinhomes which is an integral part of the consumer services ecosystem within the Vingroup family. This investment exemplifies the type of platinum brands and management teams KKR looks to work with in Southeast Asia,” Ashish Shastry, KKR’s co-head of Asia private equity and head of Southeast Asia, said in a statement.

KKR’s other investment activity in Vietnam includes a partnership with Masan Group that covers multiple businesses. The private equity firm first backed Masan Consumer Corporation in 2011, committing $359 million, and fully exited its position in 2016. A year later, it invested $100 million in the parent entity, Masan Group, and $150 million in animal feed supplier Masan Nutri-Science.

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• Topics
• Southeast Asia
• Real estate
• Real estate
• PIPEs
• Vietnam
• KKR
• Temasek Holdings