M&As the ticket for local companies

Domestic companies are muscling in on real estate project merger and acquisitions.

CBRE executive director Marc Townsend said many transaction cases were not publicised.

“I predict more projects will be transferred from foreign to domestic investors this year, as well as between domestic companies,” he said.

The merger and acquisition (M&As) trends, he added, showed that indirect investment would be more popular than direct investment.

“The aim of M&As is to find out alternative financial support and avoid the project revoked [due to long time of delay caused by lacking off capital investment of the investors],” Townsend said.

In October last year the Saigon-based Vina Properties, a domestic investment company, acquired the Dalat Palace Golf Club, the Dalat Palace Hotel and the Dalat du Parc Mercure.

Vina Properties previously in July 2008 also acquired the entire share capital of Amara Hotel Saigon from the previous joint venture between AOI Saigon Pte and Kovina.

Also in 2010, Kinh Bac City Development Shareholdings Corporation, a real estate company engaging in the investment construction and development infrastructure system acquired the $500 million Lotus hotel from Japan’s Riviera.

In 2009, the outstanding case was VinaCapital, a leading asset management, investment banking and real estate consulting firm, sold its entire 70 per cent stake in the five-star Hilton Opera Hotel in Hanoi, to a domestic partner. The name of the receiver was not released, however in its statement, VinaCapital said that the project’s gross operating profits rose 29.5 per cent in two years, to reach over $9.5 million in 2008.

In the same year, the group also sold 61 per cent out of its 73.26 per cent of stakes in the residential and retail The Oasis project in Ho Chi Minh City to a Vietnamese partner.

In 2010, Viettel, one of Vietnam’s three biggest telecommunication companies, acquired 18.9 per cent stake of Vinaconex and VinCom Joint Stock Company, a listed Vietnam-based real estate company.

“It is definitely to be true that the Vietnamese companies are now the ones could buy and invest and develop real estate projects. This is far different from the situation in 2005 and 2006 when mostly focused by foreign companies,” said David Blackhall, deputy managing director of VinaCapital Real Estate.

“I think M &As involved by domestic companies is probably a market trend since the Vietnamese companies generally have access bank finance and they are active in lending and the finance is more liquid,” he added.

The acquiring of existing properties, according to experts, could bring favour opportunities for new investors, such as they would not waste time for construction, properties are offering benefit and their performance can be foreseen.

However, the receivers will also have to face with challenges such as the operation techniques and experience and the investment capital for upgrading properties. – VIR

Tags: Vietnam M&A