Creed Group steering away from An Gia role
Creed Group steering away from An Gia role
Despite being the long-term strategic partner and biggest shareholder, Japan’s Creed Group last week announced it was letting go of millions of shares from An Gia Real Estate Investment and Development Corporation after five years in partnership.
Creed Group has poured millions of dollars into the partnership
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Creed Investment VN-1 Ltd., belonging to Creed Group, registered to sell more than 3.7 million An Gia shares before September 9. The group’s move to divest its investment despite being a strategic shareholder has surprised the market.
According to an insider who wished not to be named, there could be two reasons which have pushed Creed Group to divest from An Gia. Either the group wants to fix its profit numbers from the investment, or they may have lost faith in the prospects of An Gia itself.
For investment funds, when an investment has achieved its desired return or exceeded the expected return, the shares are sold – to recoup investment or realise profit – as purely a financial move.
VIR contacted Creed Group for comments but has yet to receive an official response.
Meanwhile, according to a source from An Gia, Creed’s motives were to restructure its portfolio only.
“The registration to sell 3.7 million shares is expected to bring Creed Group about VND96 billion ($4.1 million), equivalent to the initial investment capital. This amount is to be used to continue developing projects with An Gia in the future,” An Gia stated, referring to a representative of Creed Group, adding that currently Creed is setting up a separate fund with the initial value of $100 million to accompany An Gia in developing projects in the country.
“The initial investment value recovered by the successful sale of 3.7 million An Gia shares is expected to be reinvested by Creed Group, with An Gia expanding more strategic projects in the future,” the source added.
Creed Group is an investment fund from Japan especially investing in the real estate market. In 2015, An Gia signed a multi-sided investment deal with Creed Group, under which the investment fund committed to spend $200 million to buy stakes and co-invest in An Gia projects.
The Japanese group’s cooperation with An Gia include investing in projects developed by An Gia and contribute capital to support An Gia in developing more projects in the early stages. When Creed Group invested in An Gia five years ago, An Gia then was a small company, so the first’s investment at the time helped them buy more projects and land plots to accelerate development.
Since that time, Creed Group has poured in $4 million, equivalent to a 20 per cent ownership rate. Creed Group currently holds nearly 15,000,000 An Gia shares worth nearly VND400 billion ($17.3 million) at current market price, nearly five times the original investment.
According to Nguyen Ba Sang, chairman of An Gia, the current shareholder structure is quite diverse and includes a series of foreign investment funds such as South Korea’s KIM Investment Funds, Japan’s Tokyo Marine, and Hossier. “At this point, An Gia can completely stand on its own feet financially and has the capacity to accompany many other strategic partners in project development,” Sang said.
In January, An Gia listed 75 million shares on the Ho Chi Minh City Stock Exchange. After being listed, An Gia shares have seen impressive price and good liquidity.
“Creed Group has determined that this is an ideal time to recoup its initial investment with the shares of An Gia expected to be on the rise,” an An Gia representative said.
At its shareholder meeting in June, An Gia said that in the second quarter of 2020 amid a volatile market situation, it still achieved 2.5 times as much profit as in the same period last year while simultaneously launching new projects including the Westgate and The Standard on schedule.
According to Sang, An Gia would continue developing its mid- and over mid-end residential segment, which is in the highest demand. This year, An Gia plans to sell 1,500 units which could bring in VND2.4 trillion ($104 million) of turnover and VND410 billion ($17.8 million) of after-tax profit. In 2020 the company also reserved VND3-5 trillion ($130-215 million) to expand its land fund.
