Warburg Pincus spends $200 mln on estate stakes in VN

VNRE - Warburg Pincus has officially clinched a deal to spend US$200 million to acquire 20 percent stake in Vincom Retail, a realty arm of the Hanoi-based Vingroup Joint Stock Co, according to Vingroup.

The agreement was reached by Warburg Pincus Consortium, Warburg Pincus’ financial arm, and Vingroup, which is coded VIC on Ho Chi Minh Stock Exchange.

In addition, as part of the agreement, Warburg Pincus will commit $25 million investment in the first initial public offering (IPO) of Vingroup in international markets in the future.

Moreover, the agreement also allows Warburg Pincus to have an option to invest $100 million more in Vincom Retail depending on the growth opportunities of the retail realty market in Vietnam.

If the former chooses to do so, the latter will also have the right to increase its capital to maintain the former ownership ratios of the two sides in Vincom Retail.

According to Vingroup, the investment has been the largest investment ever made by a foreign fund in a local business. In attracting capital from foreign investors, Vingroup issued $300 million convertible bonds internationally last year.

Vingroup welcomes the investment of Warburg Pincus, and the presence of the foreign fund’s representative in the firm’s board of directors, said Ms. Le Thi Thu Thuy, vice chairwoman and CEO Vingroup CEO.

The investment from Warburg Pincus Consortium will help Vingroup accelerate the development of its high-end commercial center chain, Vincom Center and Vincom Mega Mall, in prime locations in major cities of Vietnam, she said.

The partnership will also help Vingroup be more confident in maintaining its growth strategy and strengthen its regular source of revenue and sustainability by increasing the investment portfolio of high-end retail real estate in its urban complex projects invested by Vingroup nationwide, she added.

"But it's more important that the deal enables us to gain the access to the extensive experience of Warburg Pincus on the global real estate market. This will help Vingroup grow faster in a more professional and sustainable way”, Thuy said.

The recently announced agreement marks the first foray into Vietnam by Warburg Pincus and added to Warburg Pincus’ portfolio in Asia - Pacific following its success in China, India, Korea, Australia and other Southeast Asian countries, said Joseph Gagnon, Executive Director of Warburg Pincus.

Vincom Retail Joint Stock Co, a member company of Vingroup, currently owns and manages many realty complexes under Vincom brand name. Prior to that, Vingroup had transferred all VND2.32 trillion worth of capitals previously invested in Vincom Ba Trieu, Vincom Long Bien, Vincom Center B and many other realty projects in the northern city of Hai Phong to Vincom Retail.

With total assets valued at about $1.1 billion, Vincom Retail owns and manages a chain of shopping centers situated at prime locations in Vietnam, such as Vincom Center B in Ho Chi Minh City, Vincom Center Ba Trieu and Vincom Center Long Bien in Hanoi.

In addition, Vincom Retail is preparing to operate 2 other complexes of Vincom Mega Mall - Royal City and Vincom Mega Mall - Times City in July and December this year in Hanoi.

Vingroup is Vietnam's largest private-sector real estate operator and one of the largest companies by market capitalization on the HoSE.

Warburg Pincus LLC is the asset management sector valued at more than $40 billion in investment with focus on growing companies. Founded in 1966, Warburg Pincus manages 13 investment funds, and invested more than $45 billion in over 675 companies in 35 countries.

Warburg Pincus is headquartered in New York and has offices in Amsterdam, Beijing, Frankfurt, Hong Kong, London, Luxembourg, Mauritius Island, Mumbai, San Francisco, São Paulo and Shanghai.

In the Asia - Pacific, Warburg Pincus has been successful with numerous companies and retail realty brands such as China Auto Rental, Kidswant, Intime Department Store, Red Star Macalline, Mattel, Neiman Marcus and Poundland.

Citigroup Inc was hired as the sole financial advisor to Vingroup, while Credit Suisse Group was sole financial advisor to Warburg Pincus, according to Reuters.