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Banking & Finance

Novaland lists convertible bonds in Singapore

Released at: 10:37, 03/05/2018

Novaland lists convertible bonds in Singapore

Photo: Novaland

$160 million in convertible bonds listed on the Singapore Exchange Limited.

by Hong Nhung

Vietnamese real estate developer Novaland Investment Corporation has successfully concluded a deal that will raise nearly $160 million in convertible bonds. It was listed on the Singapore Exchange Limited (SGX) on April 30. This is the first time in 6 years Vietnamese convertible bonds have been listed on the international stock exchange.

With this offering, Novaland saw strong interest from investors in Asia and Europe. The US dollar denominated unsubordinated convertible bonds due on 2023 can be converted into ordinary shares of the company at an initial conversion price of VND74,750 ($3.3). The convertible bonds, issued at par, carry a coupon of 5.5 per cent per annum payable semi-annually in arrears and a yield to maturity of 6.25 per cent per annum.   

Previously, Novaland had successfully raised $150 million through a placement of shares, bringing the total raised capital to $310 million. This is the largest capital raise that a Vietnamese company has made in a concurrent equity placement and convertible bond offering.

According to Global Capital, Novaland is a special case. Its deal is the first equity-linked bond in Vietnam in six years, breaking the lull that has persisted since a similar deal was made back in 2012. When Novaland ventured down the path of raising capital through an equity-linked and share sale combination, it took things up a notch in the region’s equity capital markets and was only worth looking at closely by other potential issuers in the region.

Novaland expects to use the net proceeds from the combined offering to further build its land bank in prime locations and to develop real estate projects. It will also be used for working capital and general corporate purposes. With this capital, the company plans to introduce three new projects this year.

Last week, the business plan for this year was passed at Novaland’s 2018 annual general meeting of shareholders. Sales are expected to reach $958 million with an after tax profit of $141 million which marks an 87 and 55 per cent increase respectively against 2017. With 11 projects (about 6,500 products) expected to be handed over this year, Novaland is confident that it can achieve these ambitious goals. 

All of their projects are located in prime strategic locations in Ho Chi Minh City and have an average sell rate of over 90 per cent, according to Novaland. The total sales of these projects will be accounted for as revenue when the project areas are handed over, contributing to strong revenues and profits for the company.

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