GIC Invests $1.3B in Vingroup as VN Developer Readies for $2B Listing

Vietnam’s Vingroup has raised $1.3 billion from Singaporean sovereign wealth fund GIC as the country’s largest real estate developer prepares to list its luxury residential arm, Vinhomes JSC on the Ho Chi Minh City Stock Exchange.

Vingroup, which last year listed its mall development unit in Vietnam’s biggest-ever domestic stock exchange offering, is poised to smash that record as the Hanoi-based firm is targetting an initial share listing of up to $2 billion for Vinhomes, according to a Bloomberg report citing people familiar with the matter. Sources said that Vinhomes may aim for a valuation of between $13 billion and $16 billion through the deal.

GIC is believed to be investing about $850 million to pick up a 7.1 percent stake in the luxury home builder, valuing the business at about $12 billion. The report follows Vingroup’s announcement Monday that it had raised $1.3 billion from GIC to purchase ordinary shares in Vinhomes and to extend a “debt-like instrument” to the subsidiary.

Vingroup announced last week it had applied to list Vinhomes on the Ho Chi Minh City (HCMC) Stock Exchange. The group said it intended to remain the largest shareholder in Vinhomes following the proposed listing.

Vinhomes Eyes Vietnam’s Biggest Stock Exchange Debut

Vinhomes operates 10 projects totalling nearly 18,000 apartments, villas and shophouses across the urban centres of Hanoi and Ho Chi Minh City and in the provinces of Quang Ninh and Ha Tinh, according to Vingroup’s 2016 annual report. This past February Vingroup was reported to have tapped four foreign banks for the unit’s planned listing, which was then said to be targetting $1 billion.

Last November, Vingroup’s mall unit Vincom Retail JSC raised about $708 million in its initial share sale on the HCMC exchange. The listing valued the Warburg Pincus-backed business, which has 41 malls across 22 provinces in the country, at about $3.4 billion, making it one of the 10 most valuable firms on the exchange.

According to the Bloomberg account, Vinhomes plans to finalise the roster of cornerstone investors for its own listing by the end of the week. The offering is understood to consist solely of stock being sold by existing investors, and the company may start marketing the deal around April 27.

Vinhomes aims to price the share sale early next month and begin trading in mid-May according to the report, which adds that the terms of the deal have not yet been finalised.

The prospective $2 billion offering by Vinhomes would far outstrip the planned $922 million share offering from Vietnam Technological and Commercial Joint Stock Bank (Techcombank) launched last week, which currently holds the crown for the southeast Asian nation’s largest stock exchange debut. GIC also signed up to be a cornerstone investor in that offering, with the sovereign wealth fund said to have signed up for a stake of somewhere less than $100 million worth of the bank’s stock.

GIC Chalks Up Another Residential Deal

GIC, which has an estimated $359 billion of global assets under management, has chalked up a series of housing-related investments in recent year. The sovereign investor has been involved in more than $3.2 billion of student residence deals around the world over the past two years, most recently tying up with CPPIB to invest $1.1 billion in university communities across the US with Chicago-based Scion Group in January.

GIC in February announced a $300 million joint venture with CCLA, which develops, owns and operates residential for-rent assets in Mexico and Latin America.

The Singaporean sovereign wealth fund has been a major investor in Vietnam, having taken a significant stake in Vingroup’s Vincom offering last November, and along with Goldman Sachs was an early stage investor in game developer VNG Corp which is now aiming for a NASDAQ listing.