Vingroup JSC, Vietnam’s largest conglomerate, has issued convertible preferred shares to raise $400 million in a private placement to South Korea’s Hanwha Asset Management Co. Ltd, according to Korea Investors.
Hanwha Asset bought 84 million preferred shares of the Vietnamese group at 110,976 dong apiece on August 22, which represented about 7% premium to its closing price of the day, according to investment banking sources.
The asset manager sold the shares down to its parent company Hanwha Life Insurance Co. Ltd. and other South Korean institutional investors through a fund vehicle launched for the investment.
The share placement came on the heels of Hanwha Asset’s failed attempt to subscribe to the $13.5 billion initial public offering of Vinhomes, a residential development unit of Vingroup, earlier this year.
The preferred stocks can be converted into common shares after a one-year lock-up period. If their share price drops, the buyers can hold them for a dividend income higher than common shares’.
“We can freely choose the timing of converting them into common shares and convert only part of them, too. We see them as low-risk investment because Vingroup is No.1 business group in Vietnam,” a Hanwha Asset source told the Korean Investors.
Vingroup has the largest stock market value at 338 trillion dong ($14.5 billion) in Vietnam as of August 22. Its businesses range from real estate development, retail and healthcare to hotel.
Hanwha Asset manages Southeast Asia-focused funds, including Hanwha Vietnam Legend fund investing in Vietnam’s stock market.
It plans to expand into alternative investments including corporate finance, infrastructure and real estate in Southeast Asia.