VinaCapital sells trophy asset for $100 million

The Vietnam Opportunity Fund, managed by VinaCapital Group, has sold its entire holding in an unnamed trophy asset for US$100 million to a newly-formed hospitality joint venture between it and US private equity firm Warburg Pincus.-Photo vietnamfinance.vn

The unnamed asset, which has the audited net asset value (NAV) of $60 million as of June 30, 2016, is believed to be the landmark century-old Sofitel Legend Metropole Hotel Hanoi.

In the filing to the London Stock Exchange, the fund announced that it received the first payment of $37 million upon signing and closing the Share Purchase Agreement on the divestment of “an asset” to a newly formed consortium.

The closed-end fund will receive minimum net proceeds of $100 million from the sale of the asset, and the balance of the remaining proceeds will be payable in two annual installments.

According to its October report, the fund’s portfolio value stood at $823.4 million as of October 31, in which the top ten highest-valued assets accounted for 58.1 per cent.

The Ha Noi-based hotel, valued at over $60 million, is the third largest investment of the fund with 7.3 per cent of its NAV, after dairy producer Vinamilk (VNM) with 16.9 per cent and steelmaker Hoa Phat Group (HPG) with 8.8 per cent.

The 365-room, French colonial-era hotel was built in 1901 near the Sword Lake in the heart of Ha Noi. It is 50 per cent owned by Vietnam Opportunity Fund and 50 per cent held by tour operator Hanoitourist Travel.

The hotel has annual revenue of around VND800 billion ($35.7 million) and net profit of VND200 billion per year, according to Cafef.vn.

The fund has been seeking to divest from the hotel since 2012, as it tries to sell premium assets after the collapse of the property market, but it has yet to succeed.

“We are delighted to have reached this agreement and we look forward to redeploying the proceeds into the many new opportunities in this market as well as toward our ongoing share buyback programme,” said managing director Andy Ho.

VinaCapital and its CEO Don Lam will continue to be involved in the oversight of the asset and are expected to participate with a non-controlling interest in the consortium.

In a related development, VinaCapital, Don Lam and Warburg Pincus LLC last week agreed to form a $300 million joint venture that focuses on development, acquisitions and operations of hotels in Viet Nam and Southeast Asia.