Vingroup steps into industrial real estate, investment advisory

Vingroup, Vietnam's largest listed conglomerate, has engaged in industrial real estate development and investment consulting as new business lines following electric vehicle manufacturing.

Vinhomes, the group's real estate developer, in 2020 decided to expand its subsidiary -Vinhomes IZ’s core operations from supporting start-up businesses to industrial park real estate development.

Within two years, Vinhomes IZ, or Vinhomes Industrial Zone Investment, has raised its chartered capital from VND70 billion ($3 million) to $798 million in April 2022, according to a Vinhomes financial report.

The company is currently working on three projects, namely the South Trang Cat Industrial Park (IP), Thuy Nguyen IP, and the expanded Hai Phong auxiliary IP.

In addition to cashing in on the surging demand for industrial parks amid a new wave of foreign direct investment and project expansion, this is a strategic move to establish an auxiliary industrial network for Vingroup's automobile production, including facilities for auto parts suppliers.

"Industrial real estate will become Vinhomes's primary segment in the future, generating stable and long-term revenue," Chairman Pham Nhat Vuong told the group’s annual general meeting in 2020.

Vinhomes stated that it is poised to sign with partners as soon as the first industrial park projects come into operation in major localities like Hai Phong and Quang Ninh.

Vingroup, listed on the Ho Chi Minh City Stock Exchange (HoSE: VIC), will also spend more than VND100 billion ($4.3 million) to establish VS Development Investment Joint Stock Company, with the group's capital contribution of 99.98%.

The firm's main business lines include management and investment consultancy. The head office is in Vinhomes Riverside Eco-Urban Area in Long Bien district, Hanoi.

Vingroup recently completed the mobilization of $525 million in international bonds on May 10. Besides paying fees and expenses for the bond issuance, much of the proceeds would be used to fund VinFast’s automobile manufacturing.

VinFast is accelerating its strategy of localizing components by inviting foreign suppliers to set up shop in Vietnam, with incentives like exemption of land and workshop rent for 10-15 years.

"We want to make the auto supporting industry develop strongly. The localization rate of VinFast vehicles is now 60% and will be 80%," Vuong told Vingroup's recent shareholder meeting.

Vuong added that about 600,000 electric vehicles to be sold in the U.S. will be made in Vietnam as the capacity of its factory in North Carolina is only 150,000 units per year, while the plan is to sell 750,000 to this market by 2026.

VinFast has issued four tranches of domestic bonds totaling VND11,500 billion ($497.3 million) since November 2021, with a 36-month maturity and a 9% annual interest rate.

Bond proceeds will be used to fund VinFast's investment programs and projects, including the procurement of machinery, equipment, copyrights, and VinFast services.

Vingroup is Vietnam's largest listed firm by market cap. Its core businesses are electric cars, real estate development (residential complexes, resorts and retail space), technology research (cloud computing, AI, big data...), education and medical care.