Warburg Pincus-Backed VN Mall Developer Raises $740M on HCMC Exchange

While Vietnam has been gaining popularity as a vacation destination in recent years, the Southeast Asian nation may soon be greeting an influx of hopeful property investors after a Warburg Pincus-backed mall developer celebrated the country’s biggest ever public listing debut this week.

Vincom Retail, the shopping centre development division of Hanoi-based Vingroup, today announced the completion of trading of approximately 415 million shares, which raised an equivalent of over US$740 million for the company’s existing shareholders.

The successful share sale makes the Vincom Retail debut the largest ever initial equity offering (IEO) on the Ho Chi Minh City Stock Exchange, and is said to provides a return of over three times the initial investment by PE giant Warburg Pincus, which first invested in the company in 2013.

GIC, HSBC and Templeton Take Cornerstone Stakes

After officially opening to limited trading yesterday, investors snapped up 21.8 percent of Vincom Retail’s issued shares today at a price of VND 40,600 ($1.79) per share. The listing values the mall developer, which 41 malls across 22 Vietnamese provinces, at a total of VND 77,000 trillion ($3.4 billion), establishing Vincom Retail as one of the 10 most valuable companies on the HCMC exchange.

“We are excited about Vincom Retail’s robust expansion plan as a leading national retail mall operator in Vietnam and its commitment to delivering long-term value to all shareholders,” Pham Nguyen Anh Thu, Chief Investment Officer of Vingroup commented in a statement.

The non-cornerstone allotment of the offering was oversubscribed by more than five times, with institutions including GIC, HSBC Global Asset Management (UK), Templeton Investments and Vietnam-based Dragon Capital among the cornerstone investors.

Dominating the Vietnam Mall Market

While shopping centres are already seen as past their peak in many other markets, Vincom Retail has built up a portfolio of over 1.1 million square metres in Vietnam since the firm opened its first mall in Hanoi in 2004. An investment consortium led by Warburg Pincus, together with Credit Suisse and Dragon Capital, committed $200 million in investment to Vincom in 2013 when the company had a portfolio of seven assets. The US private equity firm then led a $100 million investment round in the retail developer in 2015.

“Over four years ago, we had a vision to work with Vingroup to create a best-in-class fully integrated modern retail platform with a dominant presence across Vietnam,” said Jeffrey Perlman, managing director and head of Southeast Asia for Warburg Pincus in a statement. “Today, the company’s unrivaled scale and nationwide reach make it the partner of choice for retailers and brands looking to tap into Vietnam’s rapidly expanding middle class and emerging consumption.”

Global Institutions Notch Big Returns on the HCMC Exchange

Just over one month ago both Warburg Pincus and Credit Suisse were revealed as having converted their preferred stock in Vincom in advance of the initial equity offering. At the time, Warburg Pincus’ WP Investments III fund held a 15.17 percent stake in the developer, while Credit Suisse had a 5.05 percent stake.

Warburg Pincus is understood to have disposed of two-thirds of their stake in Vincom Retail following the share listing, according to sources familiar with the transaction who spoke with Mingtiandi. The private equity firm is said to have maintained five percent of the retail developer and is believed to have achieved an overall return of 3.5 times its original investment.