EXS Capital leads innovative US$37 million private equity investment into up-and-coming real estate developer in Vietnam

EXS Capital leads innovative US$37 million private equity investment into up-and-coming real estate developer in Vietnam

17:11 16 July in Press, Private Equity

Foreign investors return to a neglected market, with a more sophisticated approach

Hong  Kong,  16  July 2013  – EXS Capital Limited, an independent alternative investment group dedicated to Asia, is pleased to announce that it has led a US$37 million investment into Son Kim Land, an up-and-coming V ietnamese real estate developer with a solid track record and an exciting pipeline of development projects.

Over the past few years, foreign investors have shied away from V ietnam due to steep interest rates, high inflation, and low liquidity.  However, this deal and a recent investment by a leading global private equity firm in the retail property business sector, indicates that appetite for investment in the Southeast Asian nation may be returning.

EXS Capital began focusing on V ietnam in late 2011, viewing it as a fundamentally strong economy suffering from temporary market dislocations.   EXS Capital saw remarkable similarities between V ietnam’s capital crisis of 2010-2012 and China’s economic crises in

1994-95 and 2003-04, when China’s strong demographics and growth story was obscured by challenging fiscal policies and financial dislocation.

“Our experience in China during that era taught us that smart investors who could see past the temporary dislocation and use it to make opportunistic investments in great companies, did extremely well over the long term,” said Eric Solberg, a founding Partner and CEO of EXS Capital.   “As contrarian value-driven investors, we saw the biggest gap between the real economy and asset prices in more than a decade- as a good time to go in.”

After interviewing 27 real estate developers, EXS Capital partnered with Son Kim Land, a reputable company with extensive business connections that has allowed it to secure strategic sites in line with the city’s master development plan.   Originally a V ietnamese clothing dynasty which started in the 1950s, today, Son Kim Group is a leading retailer with over 400 stores across V ietnam, an OEM manufacturer of women’s lingerie with brand names such as Jockey, Vera, J.Buss and WOW, a joint venture partner with GS Shop of South Korea to operate one of the leading home shopping networks in V ietnam, and the local operator of SB Furniture.   The group’s strong retail expertise gives it block-by-block knowledge of key commercial neighborhoods.  Son Kim Land is the real estate arm of Son Kim Group.

“Son Kim Land is pleased to welcome our new partners.  With this new investment, we plan to accelerate the development of our projects already in the pipeline, and to leverage our local experience and relationships to opportunistically acquire additional real assets which

will enable us to emerge from this challenging period as a leading developer and the preferred local partner to international strategic and financial institutions looking for exposure to V ietnam’s real estate sector,” said Tuan Hoang Nguyen, the Chairman of Son Kim Group.

Son Kim Land has six development projects in the pipeline including two large scale mixed- use developments comprising apartment, serviced apartment, retail and office space in the center of District 2 of Ho Chi Minh City, with direct access to the new Metro currently under construction.  Also in District 2, Son Kim Land is developing a high-end residential building slated to become one of Ho Chi Minh’s most luxurious properties.  Son Kim’s other pipeline projects include a hotel and a mixed-use commercial and office development in District 1, as well as a luxury beach resort.

In addition to the initial US$37 million, EXS Capital has further commitments that may bring the investment up to US$50 million with further potential of up to US$80 million. “We’ve found that Asian high net worth investors are increasingly preferring direct deals rather than investing in a blind pool fund,”  says Mr. Solberg.   In a challenging legal and regulatory environment, both the investors and the management team are demanding a more sophisticated trade off.  In this structure, investors receive far greater downside protection while the management receives additional upside participation and retains majority control throughout.

EXS Capital is led by Eric Solberg and Kiyoshi Hirasawa, each a 20-year veteran in private investment in Asia, backed by a multi-disciplinary and multi-lingual team. Since its inception in 2007, EXS Capital has led, on a deal-by-deal basis, eight privately negotiated investments totaling over US$350 million in equity (almost US$1.3 billion of enterprise value) funded by leading global investors, all of which have produced positive returns.

 

About Son Kim Land

Son Kim Land (SKL), the property arm of Sonkim Investment & Development Corporation, is one of Vietnam’s leading property investment, management and development groups. SKL’s business foundation is based on partnership, performance, and integrity.

Along with its large staff of experienced professionals, SKL has cooperated closely with established real estate consulting firms such as: Savills, CBRE and DTZ; with international developers including: Hong Kong Land and Kumho Asiana; and with experienced architecture, construction, design firms such as:  Ronald Lu & P artner, Aedas, Orange Engineer, MAI and PTW.

Furthermore, with SKL’s extensive business contacts in both private and public sectors throughout Vietnam, SKL is strategically positioned to grow with the exploding Vietnam real estate markets over the coming years. Currently, SKL  has  a  diversified  portfolio  of  real  estate  projects  in  three  core  sectors  –  residential and commercial properties and hotels and resorts.