Son Kim has bagged a whooping $121 million from an investor consortium including EXS Capital, ACA Investments, and Credit Suisse AG – Singapore Branch. How did you manage to raise this biggest-ever round of funding and how are you going to spend it?
Andy Han Suk Jung: Yes, this time SonKim Land has raised $121 million from existing and new investors. Proceeds from this round of fundraising, which is the biggest so far for us, SonKim Land plans to acquire more properties for development and land bank for our future initial public offering (IPO).
In particular, we will be acquiring new residential projects comprising of high-rise, landed property, and township developments, as well as commercial projects including office, hotel, service apartment, and retail projects in and outside of Ho Chi Minh City. Also, the company plans to offer various benefits to its employees to be able to attract talents in the market to strengthen our human resources.
From your point of view, what are the biggest concerns for foreign investors when considering investing in Vietnam’s real estate market and how did SonKim Land address these concerns for your investors to confidently pour money into Vietnam?
The biggest concern for foreign investors would be to find a reliable company that would not only be able to secure their investment principles, but also to generate proper returns on the investment.
So having an international management precedure and having transparency through employing one of the big five international accounting firms to provide the audit services and strict internal control, and proven development track record, as well as having good projects in the pipeline, are the key criteria in which investors would consider for their investments in Vietnam.
Why did you decide on a capital raising round rather than basically borrowing from banks?
SonKim Land does work with banks and local financial institutions for various financing needs, but this particular follow-up fundraising was to bring in international investors as shareholders for SonKim Land, as part of an attempt to back our future growth and targeting a successful IPO in a couple of years.
One of the investors in the recent fundraising, Credit Suisse, has been active in Vietnam since 2001. It has worked with many leading corporations and burgeoning entrepreneurs in the country over the years and raised over $7 billion for Vietnamese clients as well as advised on many landmark transactions. With all the supports from our new and old investors, we believe SonKim Land can be an iconic leader in the luxury property development market.
Would you rather find it hard to spend the fund in the coming time as the project approval process is sluggish in not only Ho Chi Minh City but also other cities and provinces, which overall seems to discourage foreign investors to flock into the sector?
Recent slow approval process, especially in Ho Chi Minh City, was a bit of concern, but it was not a discouraging factor for foreign investors of SonKim Land. We know that this will be a temporary issue and the situation will improve over time. Some projects in the pipeline would anyway need some time to go through the approval process, so it is not so discouraging.
While we take Ho Chi Minh City as the key area of focus, we have in fact been actively seeking for development opportunities in other cities as well, and have made some progress with these. We are expecting to launch some projects outside Ho Chi Minh City soon.
With regards to the time and location, we will announce as we close each deal. At the moment, we plan to develop residential, resort, office, and retail projects in other cities.