KKR, Temasek Invest $650M for Stake in Vietnamese Developer

Just 25 months after raising $1.35 billion in what then ranked as Vietnam’s largest IPO ever, Hanoi-based residential developer Vinhomes is selling a minority stake in the company to a KKR-led consortium for VND 15.1 trillion (US$650 million), according to a statement today.

Singapore’s Temasek Holdings is joining KKR’s investment, according to the communique, with the group collectively acquiring a 6 percent equity stake in the homebuilder spun off from Vietnamese entrepreneur Pham Nhat Vuong’s VinGroup conglomerate in 2018.

KKR, which is investing through its Asian Fund III private equity vehicle, explained the deal as driven by its belief in Vietnam’s investment prospects and in the strength of Vingroup, a conglomerate which has already partnered on projects with Singapore’s GIC, Warburg Pincus and other international institutions.

KKR Bets on Vietnam’s Potential

“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,” said Ashish Shastry, co-head of private equity for KKR Asia Pacific and head of the company’s southeast Asia unit. He added that, “Today’s announcement further underscores our strong commitment to Vietnam, where KKR has been active and present for nearly a decade.”

The New York-based buyout pioneer is investing in Vinhomes at a time when Vietnam’s housing market has faced challenges from the COVID-19 crisis, in particular from a lockdown of international travel, which has cut off the supply of foreign buyers that have driven the country’s luxury housing sector.

Sales of all grades of housing fell in Vietnam during the first quarter, according to property consultancy Savills, although the firm expressed optimism that top tier markets could improve in 2021.

Vingroup Expands Empire

Vinhomes has developed projects in 40 cities in Vietnam and brought home VND 21.7 trillion in profit after tax and minority interest in 2019, based on VND 51.6 trillion in revenue, according to official company statements.

Primarily a residential builder, Vinhomes in 2018 opened the doors to Vietnam’s tallest tower, the 461.15 metre (1,513 foot) Landmark 81 in Ho Chi Minh City’s Binh Thanh district.

Following the investment, Vingroup will continue to be the largest shareholder in the company, with Vinhomes chairwoman Nguyen Dieu Linh welcoming the company’s new partners. “As a reputable, world-class institution, KKR’s expertise and proven track record of helping companies achieve long-term success will be valuable as we work together to enhance value for Vinhomes shareholders,” Nguyen said.

Credit Suisse Singapore acted as sole financial advisor to Vingroup on the share sale.

Singapore Inc Buys More of Vinhomes

The participation of Temasek Holdings, the Singapore government’s S$313 billion ($225 billion) holding company, is the latest in a series of wagers by investors in Southeast Asia’s wealthiest nation into the region’s major growth economy.

Just before the Vinhomes IPO in May 2018, Singapore’s GIC invested $1.3 billion into the firm, reportedly committing $850 million for a 7.1 percent equity stake, with the remainder of the financing packaged as debt.

Then in March last year the sovereign wealth fund followed up with a $500 million investment into VCM Services & Trading Development JSC, a retail unit of Vingroup.

In 2017, Vincom Retail, a mall development joint venture between Vingroup and Warburg Pincus staged a $740 million debut on Ho Chi Minh City’s stock exchange.