A consortium led by US buyout group KKR has paid $650m for a stake in the property arm of Vietnam’s biggest conglomerate, marking one of the south-east Asian country’s largest ever private equity investments.
KKR said on Tuesday that alongside investors including Singapore state investment fund Temasek it had acquired 6 per cent of Vinhomes, the listed property division of Vingroup.
Vietnam has been one of the biggest beneficiaries of companies’ efforts to diversify their supply chains in the wake of rising US-China tensions and vulnerabilities exposed by the coronavirus pandemic.
KKR, which has about $207bn in assets under management, said the deal underscored Vietnam’s attractiveness as an investment destination. The government has projected 5 per cent GDP growth this year after largely containing the coronavirus outbreak in the country. Vietnam has recorded no Covid-19 deaths.
“Vietnam today is where China was about 15 years ago, in terms of GDP per capita,” Ming Lu, head of Asia for KKR, told the Financial Times. “To invest behind a family group with whom we have a shared philosophy is a winning formula.”
Vinhomes is known for building high-rise and villa developments for middle-class and wealthy buyers.
Parent Vingroup, controlled by Vietnam’s richest man Pham Nhat Vuong, has a diversified portfolio of businesses including resorts, the VinFast car brand and mobile phones.
Many of these businesses have been affected by the pandemic, including property. New projects have stalled in Vietnam due to the health crisis and a slowdown in planning approvals in Hanoi and Ho Chi Minh City, where much of Vietnam’s newly rich professional class live. That has prompted Vinhomes and other developers to shift their focus to smaller Vietnamese cities.
Property in emerging markets such as Vietnam and India has become a favoured sector among private equity groups. However, investors have reported that potential deals across the region have been suspended because of prospective buyers’ inability to do on-the-ground due diligence.
Investors say private equity firms hope to eventually move toward buyouts of publicly listed companies in the region, rather than taking minority stakes. Some investors had hoped for a wave of distressed sales due to coronavirus.
KKR has been an active investor in the region, both out of its $9.3bn Asia fund and its new technology fund. In May the group committed to invest in Mukesh Ambani’s telecoms group Jio Platforms.
Nguyen Dieu Linh, chairwoman of Vinhomes, said the KKR-led investment reflected international investors’ confidence in the company and the Vietnamese market.
Vingroup has previous experience of working with foreign funds, having attracted investment from Warburg Pincus seven years ago. Vinhomes’s Ho Chi Minh City-listed shares closed 7 per cent higher on Tuesday.
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