Becamex IDC defaulting on contractual obligations?
Becamex IDC defaulting on contractual obligations?
Despite being considered one of Vietnam’s leading property developers, Becamex IDC Corporation (Becamex IDC) is at odds with customers over unfulfilled promises.
Empty promises
According to Tienphong.vn, numerous people complained that Becamex IDC is delaying handing over the land use right certificates of apartments at the My Phuoc 4 urban area project to customers.
Notably, according to a customer, in 2012 Becamex IDC put on sale apartments in My Phuoc 4 urban area project. At the time, the investor affirmed that after customers paid off the apartment price according to the contract, Becamex IDC would hand over the land use right certificate.
However, nearly six years since then, the firm has yet to do good on its promise.
Along with the money spent on buying the apartments in the projects, customers also wasted massive amounts of money on transportation between cities to deal with the conflict.
The firm has yet to show the slightest intention to co-operate with customers to resolve the incident. Notably, numerous customers arrived to Becamex IDC’s office to meet the Board of Directors, however, the receptionists refused to set up a meeting.
The My Phuoc 4 urban area project was considered a key project of Binh Duong province. According to the plan, the project would meet Singaporean standards and include high-end apartments, a shopping centre, a park, schools, and a hospital. However, according to Tienphong’s reporter, to date, the project is still in limbo.
Unmarketable IPO
Becamex IDC reported two failed auctions, showing the unattractiveness of its shares among investors.
According to information published on the Ho Chi Minh City Stock Exchange, at the second auction, only four investors bought 5.1 million shares at the price of VND31,000 ($1.37) apiece. Becamex IDC earned VND158 billion ($6.96 million) in proceeds.
Thereby, after the two auctions, Becamex IDC has only sold 24 million shares, equalling 7.7 per cent of the offered volume.
Earlier on December 1, Becamex IDC put 311.2 million shares, equalling 23.6 per cent of its charter capital, on sale at its initial public offering (IPO). As a result, 149 of 158 registered investors won in the bidding with the highest and lowest buying prices of VND40,000 ($1.76-1.35) and VND31,000 ($1.37) per share.
After the bidding, Becamex IDC only acquired VND587.7 billion ($25.87 million) from selling 18.9 million shares or 6 per cent of the offered share volume.
The reason behind so many shares being unmarketable was the corporation’s apathy in communications as well as in publishing information about its IPO.
Ambitions to become industrial and logistics developer
On May 15, Becamex IDC released that it entered into co-operation with Warburg Pincus, the leading global private equity firm focused on growth investing, to establish a joint venture in Vietnam, BW Industrial Development JSC, with 70 per cent held by Warburg Pincus.
Having an initial investment of over $200 million, the joint venture bought eight projects with the total area of more than 200 hectares in five cities and provinces, namely Binh Duong, Dong Nai, Haiphong, Hai Duong, and Bac Ninh.
The joint venture combines the strength and experience of its joint venture partners and is committed to building the leading national real estate platform and become an industrial park and logistics rental property developer.
Becamex IDC is considered one of Vietnam’s leading property developers, owning 28 subsidiaries and joint ventures in the areas of securities, finance, insurance, banking, construction, trading, real estate, services, telecommunication-information technology, concrete production, construction materials, mining, pharmaceuticals, healthcare, and education, with a charter capital of approximately VND5.5 trillion ($242.1 million).
Becamex IDC currently manages six industrial parks, however, the revenue and profit from these IPs are still limited. In the first quarter of this year, the firm earned VND1.91 trillion ($83.88 million) in revenue and VND483.6 billion ($21.2 million) in after-tax profit. However, it still reported an accumulated loss of VND147 billion ($6.45 million).
