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JLL playing key role in property M&As

Released at: 15:06, 19/01/2018

JLL playing key role in property M&As

Photo: JLL

Ms. Khanh Nguyen, Associate Director of Capital Markets at JLL, shares her insights into mergers and acquisitions in Vietnam's real estate market.

by Linh San

How has JLL’s consultancy on mergers and acquisitions (M&As) in the property sector been proceeding?

The total value of transactions consulted by JLL reached over $250 million recently and most of the transaction types are property transfers and joint venture partnerships between Vietnamese and foreign developers. Among these, the cooperation between Ho Chi Minh City Infrastructure Investment JSC (CII) and Hongkong Land (HKL) was typical.

How have foreign investment flows into Vietnam via the M&A channel been over the last few years?

The real estate market in 2017 continued to witness a record number of M&A transactions. It continues showing irresistible appeal to foreign investors, mostly through M&A. JLL has observed that there are hundreds of millions of dollars waiting to be poured into most segments of the real estate market, including residential, office, retail, hospitality, and industrial. Investors are from a range of countries, such as Japan, South Korea, and Singapore, with an increasing number of groups from mainland China.

Due to the strong focus on Vietnam from regional investors, we expect M&A activities to reach record levels in 2018.

JLL successfully consulted on the joint venture partnership between the Ho Chi Minh City Infrastructure Investment JSC and Hongkong Land. What was the key factor behind the deal’s success?

The key factor in this transaction was the identification of the right investor, who met all the requirements of CII. As a listed company, CII has very strict criteria and requirements when selecting suitable partners.

Apart from extensive expertise in real estate development in the region in general and in Vietnam in particular, CII also required potential partners have a strong financial capacity, respect for partners, and long-term commitment. We see the strict requirements as being perfectly reasonable, as they would like to choose a long-term strategic partner in order to offer high-quality residential products in the Thu Thiem New Urban Area.

To choose the right partner, CII worked with numerous reputable foreign investors, who met most of its criteria. After a long process of selection, negotiation, and careful consideration, on December 12, CII and HKL officially signed a cooperation contract to jointly develop the Thu Thiem River Park project. JLL was proud to be the successful consultant on this sustainable development cooperation.

What are the outstanding factors in this deal compared to others?

Since both are listed companies, due diligence was conducted with clear and transparent information. Both CII and HKL worked hard to facilitate a negotiation process that was mutually beneficial to both parties.

What about the capacity of the two sides?

We have seen that both CII and HKL are reputable developers with extensive expertise in project development.

CII is one of the leading infrastructure development companies in Vietnam. Notable projects include the Saigon 2 Bridge, Rach Chiec Bridge, Rach Mieu Bridge, the Northern Residential Area Infrastructure project, and the completion of the North-South axial road in the Thu Thiem New Urban Area, one of its main roads.

Meanwhile, HKL is a leading investment, property management, and development fund. Established in 1889, it owns and manages nearly 800,000 sq m of prime office space and high-end retail markets in major Asian cities, such as Hong Kong and Singapore. In Vietnam, it has invested in two Grade A office buildings in Hanoi and a high-end residential project, The Nassim, with 238 apartments, in Ho Chi Minh City’s District 2.

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