Revealing "huge" deals
Since the beginning of October, the Southern real estate market has witnessed two large-value mergers and acquisitions (M&A) projects, with the seller being the "giant" from Singapore - Keppel Group.
According to the announcement sent by Keppel, its subsidiary Jencity Limited is divesting 70% of its capital at Saigon Sports Company Limited - the investor of the "super" project Saigon Sports City. The buyers are 2 domestic enterprises, each buying 35% of the capital.
Of which, Dai Phuoc Two-Member LLC will buy the first 35% of capital in 2 installments with payment amount from 3,199 billion VND to 3,610 billion VND. The buyer of the second 35% of capital is Vinobly Real Estate Joint Stock Company, paying from 3,359 billion VND to 3,839 billion VND. After the transaction, Jencity Limited still holds 30% of capital at Saigon Sports Company Limited.
Notably, the transferees are two domestic enterprises that have only been established for about 10 months, with charter capital of several hundred billion VND. Therefore, this is considered a "small fish swallowing big fish" deal with a transaction value of up to nearly 7,500 billion VND.
The second deal that Keppel is also conducting is another capital sale related to the Saigon Centre Phase 3 project in District 1, Ho Chi Minh City. Accordingly, Toshin Development (a Japanese enterprise) wants to pay a cash amount of about 46.4 million USD, equivalent to about 1,142 billion VND to register to buy shares of Himawari VNSC3 (a subsidiary of Keppel) - the enterprise that is controlling the Saigon Centre Phase 3 project. The payment amount is expected to be divided into 7 installments, the last installment will be paid after the Saigon Centre Phase 3 project is granted a construction permit.
In late September, global reinsurance company AON Plc wanted to sell the Landmark 72 complex of three buildings in Hanoi, including the second tallest skyscraper in Vietnam, Keangnam Hanoi Landmark Tower. The assets are worth nearly $749 million. One of the interested parties is South Korea's Mirae Asset Securities.
Another notable deal is Bitexco Group LLC selling 100% of its capital at the investor of the Ben Thanh Quadrangle super project (The Spirit of Saigon project) in the context of being under pressure to repay 10 bonds worth VND10,000 billion. The transferee is Hanoi Phuong Dong Real Estate LLC.
Will M&A be more exciting in the coming time?
Large deals with transaction values ranging from several thousand to tens of thousands of billion VND have begun to heat up the project M&A market in the last quarter of this year, while in previous quarters the market has not recorded any large value deals. However, the market has not really been as vibrant as expected. Especially in big cities like Hanoi and Ho Chi Minh City, project M&A still faces many difficulties.
Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HoREA), said that no projects were implemented through M&A in the first 8 months of the year in Ho Chi Minh City, while M&A deals can help clear inventory faster and bring in investors with stronger financial capacity.
According to Mr. Chau, the reason these transactions are being blocked is due to the provisions in the Law on Real Estate Business, which requires the transferor to fulfill financial obligations before being allowed to transfer.
Especially for foreign investors, Dr. Su Ngoc Khuong - Senior Director of Savills Vietnam - said: "Foreign investors see large cities like Hanoi and Ho Chi Minh City as metropolises with very attractive investment potential. However, they face difficulties due to legal issues and access to land funds. Therefore, it is difficult for them to enter these two markets, except in cases of cooperation with domestic enterprises. The market for foreign investors is very large but also very difficult to access, except for projects that have existed for a long time and have completed legal procedures 5-7 years ago" Mr. Khuong commented.
However, in the last months of 2024 and 2025, Savills Vietnam forecasts that FDI capital will continue to flow into Vietnam and M&A deals will increase thanks to improvements in the legal corridor and infrastructure development. The industrial park real estate market will be the main destination for foreign capital flows, as demand for production space increases from foreign investors.
Regarding M&A activities, Ms. Trang Bui - General Director of Cushman & Wakefield - said that currently, foreign investors have begun to transfer capital into real estate projects in the form of share acquisition. The group of foreign investors mainly comes from Singapore, Taiwan (China), Japan, Malaysia... The capital scale for each transaction is about 20 - 50 million USD. In particular, Ms. Trang said that this is a very good opportunity for foreign investors who have available funds and are waiting to start collecting, buying or investing in projects that need capital.
Dr. Nguyen Duy Phuong - Investment Director of DG Capital - also expressed the view that the financial health of many domestic real estate enterprises is still weak and they have not yet accessed large capital sources, while project development costs are increasing. Therefore, selling projects to investors with better financial potential and project implementation capacity will help the seller earn a large amount of money to serve investment and business activities.
"It is expected that a large amount of capital from foreign investors will flow into the Vietnamese real estate market in the period of 2024 - 2026, along with that, many transactions are in the process of active negotiation. Investment appetite is for projects with clean, good quality land funds, real value as well as legal ownership, complete site clearance and development potential," said Dr. Phuong.
