Vinhomes raises $1.35 billion in Vietnam's biggest share issue - sources

By Anshuman Daga

SINGAPORE (Reuters) - An initial equity offering of Vinhomes JSC, the residential property development unit of Vingroup JSC, raised about $1.35 billion in Vietnam's biggest ever issue after being priced at the top of an indicative range, sources said on Monday.

The company is betting on rising home sales to drive its business at a time when foreign and local investors are pouring money into the country, attracted by strong economic growth and a slew of sales by state-owned and private companies.

Existing Vinhomes investors are selling about 268 million shares, or 10 percent of the firm's equity capital, at 114,700 dong ($5.03) each, versus an indicative range of 110,500-114,700 dong, said the sources, who are familiar with the matter but did not want to be named as terms of the pricing were confidential.

Vingroup declined to comment on the pricing.

Sources had previously said Vinhomes' flotation could raise up to $2 billion. As the issue was not sold to retail investors, bankers refer to it as an initial equity offering.

Vietnam's strong growth prospects, a privatisation drive by the government and successful private sector IPOs over the past two years have attracted many investors to the country.

Last month, Singapore wealth fund GIC came in as a pre-IPO investor and took a roughly 7 percent stake in Vinhomes for about $853 million by buying shares from Vingroup and other shareholders, sources said.

Vinhomes' first-quarter net profit jumped five times from the same period last year to 3.99 trillion dong, and revenue surged three times to 10.54 trillion dong, its financial statements showed.

Vinhomes is among the leading residential property providers in the Southeast Asian country, where a surging economy and expanding middle class have helped the real estate sector recover from the bursting of a bubble in 2010-2013.

"There has been much discussion and debating about whether another bubble is forming. Previously I held that view but not now," said David Blackhall, a managing director at Ho Chi Minh City-based VinaCapital.

"The market has cooled slightly over the past six months and this has taken some heat off a very bullish market, so the residential market today is sustainable and more balanced on supply and demand," Blackhall said.

Vinhomes said in a presentation to investors it had sold 42,000 residential units since 2010. Its contracted sales of launched projects had reached $3 billion by the end of 2017, and is expected to increase to $4.6 billion by 2018 and $7.6 billion by 2019.

Vinhomes' equity offering eclipsed an offering from Vietnam Technological and Commercial Joint Stock Bank, which was also priced at the top of an indicative range and raised roughly $922 million last month.

Though local equity markets have dropped 15 percent from a record high struck last month, analysts view the correction as short-lived.

Global and local investors such as Capital Research and Management Company, Dragon Capital and Mirae Asset Global Investments agreed to take up about three-quarters of Vinhomes' equity offering, according to a termsheet of the issue.

Citigroup, Credit Suisse, Deutsche Bank and Morgan Stanley are joint global co-ordinators for the deal.

($1 = 22,788 dong)

(Reporting by Anshuman Daga; Additional reporting by Mai Nguyen and Khanh Vu in HANOI; Editing by Himani Sarkar, Stephen Coates and Mark Potter)