JLL stands by the gates of Vietnam’s M&A renaissance

VIETNAM, 18 January 2018 – 2017 has been a remarkable year for Jones Lang LaSalle (JLL) in Vietnam with all departments reporting unprecedented growth and the Capital Markets department successfully closing a number of high profile deals. As an example, JLL successfully consulted on the joint-venture partnership between Hongkong Land and Ho Chi Minh City Infrastructure Investment JSC. Khanh Nguyen, Associate Director of Capital Markets at JLL, has given her insights into the case and on merger-and-acquisition activities in Vietnam.​​

By Khanh Nguyen, Associate Director of Capital Markets at JLL​, khanh.nguyen@ap.jll.com

1.    How has JLL's consultancy on mergers and acquisitions (M&As) in the property sector been going?

Recently, the total value of transactions consulted by JLL reached over $250 million and most of the transaction types are property transfer 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 a typical case.

2.    What do you think about the deal between HKL and CII and what is the key factor to make this deal successful?

The key success factor of this transaction relies heavily on the identification of the right investor, who can meet all the requirements of CII. Being a listed company, CII has very strict criteria and requirements in the selection process of suitable partners.

Apart from extensive expertise in real estate development sector in the region in general and in the Vietnamese market in particular, CII also requires their potential partner to have a strong financial capacity, respect for its partners, and long-term commitment. We understand that the strict requirements of CII are perfectly reasonable as they would like to choose a long-term strategic partner in order to offer high-quality residential products in Thu Thiem New Urban Area.

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

3.    What are the outstanding factors of this deal compared to others?

Since both are listed companies, the due diligence process is conducted with clear and transparent information. Both CII and HKL have been working hard together to facilitate a negotiation process that is mutually beneficial for both parties.

4.    How about the capacity of both two sides of this deal?

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. Their notable projects include the Saigon 2 Bridge, Rach Chiec Bridge, Rach Mieu Bridge, the project on Northern Residential Area Infrastructure, and completion of the North-South axial road, one of the main roads in Thu Thiem New Urban Area.

Meanwhile, HKL is a leading investment, property management, and development fund. Established in 1889, HKL owns and manages nearly 800,000 square metres of prime office space and high-end retail markets in major Asian cities, mainly in Hong Kong and Singapore. In Vietnam, Hongkong Land has invested in two Grade A office buildings in Hanoi and a high-end residential project called the Nassim, supplying 238 apartment units for District 2 of Ho Chi Minh City.

 
​ 5.    How has foreign investment flow into Vietnam been during the past few years in the M&A channel?

The real estate market in 2017 continues to witness a record number of M&A transactions. The Vietnamese real estate market continues showing irresistible appeal to foreign investors, mostly through M&A. JLL observes that there are hundreds of millions of dollars waiting to be poured into the market in most segments including residential, office, retail, hospitality, and industrial. Investors are from many different 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 new record levels in 2018.