Warburg to bank windfall on Vincom exit – updated

The US firm’s domestic listing of mall operator Vincom is expected to raise more than $600m.

Warburg Pincus is set to land a windfall for its investors with the listing of Vietnamese shopping mall operator Vincom Retail on the Ho Chi Minh Index on 6 November, Private Equity International has learned.

The firm sold 21.8 percent of its stake, with the IPO priced at VND 40,600 per share ($1.8; €1.5) or a total value of over $740 million, according to statement from Warburg. Vincom Retail is valued at more than VND 77,000 trillion or $ 3.4 billion. The transaction would generate a return of between 3x and 4x for Warburg’s investors and will mark the largest initial equity offering in Vietnam’s history.

Warburg made its first investment in Vietnam in May 2013, acquiring a roughly 20 percent stake in Vincom for $200 million alongside a consortium of investors including Credit Suisse. It completed a further $100 million investment two years later for an unspecified additional equity.

Warburg is understood to have made the investment in Vincom via its 2012-vintage $11.2 billion Fund XI. That fund is showing a 12.35 percent internal rate of return and 1.35x money multiple, according to 30 June 2017 documents from Minnesota State Board of Investment. Limited partners in the fund include Alameda Country Employees Retirement Association, Alaska Permanent Fund and AP Fonden 3, PEI data show.

Investors have already agreed to buy 59 percent or $382 million worth of Vincom stock, with Singapore state investor GIC, Franklin Templeton, HSBC Global Asset Management and Genesis Investment Management among nine cornerstone buyers. Other investors include Avanda Investment Management, TT International, Dragon Capital, RWC and Karst Peak, media reports indicate.

The sale has received strong response from investors and was four times oversubscribed, according to a source with knowledge of the matter.

The share sale is being run by Credit Suisse, Citi and Deutsche Bank.

Vincom Retail is the largest shopping mall operator in Vietnam. During its ownership, Warburg has grown Vincom’s offering from just five properties in 2013 to 65 malls in 2017, making it the only national mall network in the country. Its portfolio includes Vincom Mega Mall Royal City and Vincom Mega Mall Times City.

PEI understands that Warburg will hold roughly 5 percent of Vincom after the IPO.

Warburg declined to comment on the deal.

Vietnam is a key long-term focus for Warburg in South-East Asia. Jeffrey Perlman, who leads the firm’s investment activities in the region, told delegates at a Credit Suisse conference in Hong Kong last year that the country’s compelling narratives include “rising domestic consumption driven by the country’s growing middle class” and the “transformative shift” of China’s manufacturing base as costs rise.

“This is a region that we feel will be important for the firm going forward. We want it to be targeted so we want to be focused initially on Vietnam, which we see as an extension of our China strategy.”

In November last year, Warburg teamed up with Vietnamese private equity firm VinaCapital for a $300 million hospitality joint venture in South-East Asia.

–This story has been updated to show the final trading price at VND 40,600 per share.