Vietnam’s Vingroup Makes Strategic Move with $1.6 Billion Sale of Vincom Retail Stake

In a significant move in Vietnam’s corporate landscape, Vingroup, the country’s largest conglomerate, has completed the sale of a 41.5% stake and other assets in its retail arm, Vincom Retail, for a staggering $1.6 billion. This transaction ranks among the largest mergers and acquisitions (M&A) deals in Vietnam in recent years, underscoring the dynamism of the country’s economy and corporate sector.

The sale, confirmed by a Vingroup official, marks a pivotal moment for both companies involved. As a result of the deal, Vingroup now holds an 18.8% stake in Vincom Retail, signaling a significant reduction in its ownership of the shopping mall operator. Notably, Vincom Retail ceases to be a unit of Vingroup, as per a filing made by the conglomerate to the authorities.

Following this announcement, shares in Vincom Retail surged by 7%, reaching their highest level in nearly a month, demonstrating investor confidence in the deal’s implications. The assets included in the sale encompass Vingroup-owned SDI Trading Development and Investment Ltd, which holds the aforementioned stake in Vincom Retail, according to Anh Ta, Vingroup’s chief investment officer.

Ta revealed that the buyers are domestic partners, with no single entity holding more than a 25% stake. However, specific details regarding the buyers were not disclosed. Ta further explained that the divestment aligns with Vingroup’s capital allocation strategy, aiming to reallocate resources from mature businesses to those with greater growth potential.

“This is part of Vingroup’s capital allocation strategy to redeploy capital from relatively more mature businesses to those with higher growth potential,” said Ta during an analysts’ call.

He also outlined the timeline for the completion of the divestment, with the sale of a 55% interest in SDI expected to conclude within March, followed by the remaining portion within the next six months. Ta emphasized that the deal would not alter the strategic direction of Vincom Retail.

The sale of the 41.5% stake in Vincom Retail is estimated to be valued at around $1 billion, according to data from the London Stock Exchange Group (LSEG), underlining its significance in the Vietnamese M&A landscape.

Reports from Reuters last year had indicated Vingroup’s intention to divest its stake in Vincom, which boasts ownership of 83 shopping malls across Vietnam. This move comes at a time when Vietnam’s economy has shown resilience and growth, with the country emerging as one of Asia’s fastest-growing economies, expanding by 5% last year.

Vincom Retail shares have also witnessed a positive trajectory, gaining 18.2% since the beginning of the year, reflecting investors’ optimism regarding the company’s future prospects.

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