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Warburg Pincus invests additional $100mn in Vietnam

The New York-based private equity firm has led a consortium of investors to make a follow-on investment in its partly-owned retail platform in Vietnam.  

New York-based private equity firm Warburg Pincus has led an additional investment of $100 million in Vietnam-based Vincom Retail, the retail property business of one of the country’s largest private real estate companies, Vingroup Joint Stock Company.

With the additional investment, the consortium of investors has made a total equity investment of $300 million in Vincom Retail, which is one of the largest shopping mall operators in the country. According to a statement announcing the deal, this is the largest investment ever made by a private equity firm in Vietnam.

Warburg Pincus is understood to have contributed the majority of this investment via its $11.2 billion Fund X1, the eleventh in the series of private equity funds.

In May 2013, Warburg Pincus made its first investment in Vietnam when it led a group of investors to purchase a 20 percent stake in Vincom Retail for $200 million. The deal also gave Warburg Pincus seats on the boards of both Vincom Retail and its parent company, Vingroup.

During the time, the private equity firm had also promised to commit up to $25 million to the company’s future capital-raising efforts, with an additional option of committing another $100 million to the retail platform for purposes of expansion.

On the fruition of the follow-on investment, Jeffrey Perlman, managing director of Warburg Pincus said: “We are very pleased with the growth and performance of Vincom Retail since our initial investment. We believe strongly in the long-term economic prospects for Vietnam on the back of continued urbanization and emerging middle class consumption. With its best in-class management team, leading integrated retail platform and unrivaled local expertise, Vincom Retail is poised for strong growth over the next five years.”

Vincom Retail currently has 20 malls in operation or under development across Vietnam. Since its partnership with Warburg Pincus, the platform has more than tripled the size of its portfolio, said Duong Thi Mai Hoa, chief executive officer of Vingroup.

“The follow-on investment is a vote of confidence from our investors in our strong performance to date and our long-term vision for both Vincom Retail and Vietnam. Warburg Pincus has been a great partner and we believe this investment will help us to further accelerate the buildout of our malls as well as our broader retail platform, which includes VinMart, VinDS, VinFashion and VinPro on a national basis.”

Earlier this year in February, Warburg Pincus further expanded its Southeast Asia real estate portfolio with the formation of a joint venture partnership to develop retail malls in Indonesia. The $125 million partnership was made with Nirvana, an Indonesian real estate developer and operator, for the development of hypermarket-anchored shopping malls across second-and third-tier cities in the country. Similar to the Vietnam deal, the firm also has an option of investing additional equity in the joint venture at a later period.