M&A heating up in industrial real estate
M&A heating up in industrial real estate
Implementing merger and acquisition deals is an opportunity for real estate developers and partners to team up to develop large-scale and high-quality industrial zones.
In late July, PC1 Group JSC, a Vietnamese group operating in power construction, energy, and property, signed a contract to buy the entire stake in Singapore-based Nomura Asia Investment Vietnam (NAIV).
NAIV holds 70 per cent of charter capital at Nomura-Haiphong Industrial Zone Development Corporation, thus after the deal, PC1 will replace NAIV in operating Nomura-Haiphong Industrial Zone (NHIZ). This transaction is a part of PC1’s plan to develop industrial real estate to add to its funding strategy and gradually develop the group’s ecosystem.
“Through merger and acquisition (M&A) transactions, PC1 will take advantage in terms of clean energy solutions to upgrade its partners’ existing IZs to eco-equivalents. We will also cooperate with partners to develop new eco-IZs to meet the demand of investors,” a PC1 representative said.
For example, at NHIZ, PC1 plans to install clean energy solutions for factories and the application of intelligent management software and digital transformation.
Regarding the specific schedule to convert NHIZ, the representative of PC1 told VIR it will still take some months to complete legal procedures and works relating to the deals.
Industrial real estate is still the most prominent M&A sector, accounting for 35 per cent of the total transaction value with a series of outstanding deals made this year, according to statistics from the global real estate services firm Cushman & Wakefield Vietnam.
Some of the biggest deals combine the acquisition of BW Industrial Development, a developer co-founded by Warburg Pincus and Becamex IDC in Bac Tien Phong Industrial Zone in the northeastern province of Quang Ninh, developed by DEEP C Industrial Zones. A second prominent deal involves Boustead Projects Co., Ltd.’s acquisition of 49 per cent in KTG & Boustead Logistics Industry JSC in Yen Phong IZ in the northern province of Bac Ninh for $6.9 million.
Both of these deals were completed in February.
Besides that, Saigontel, Vinacapital, and Singapore’s Aurous Capital Pte., Ltd. signed an MoU on developing an industrial and urban complex worth $2.5 billion in the northern province of Bac Giang in February this year.
Tran Thi Thu Huong, deputy general director of Long Duc Industrial Park in the southern province of Dong Nai said, “The leading purpose of M&A deals in industrial real estate is to join forces to develop projects. To establish an IZ and take it into smooth operation, the investors need to complete legal procedures, land clearance, construct, and operate the zone. It is difficult for investors to cover all of these works by themselves in a short time.”
Another key reason for similar cooperation is to improve the quality and service of IZs to attract large foreign groups, according to Huong.
At present, when many investors look to pour money into Vietnam, they want to issue more strict criteria to select zones, such as integrated eco-IZs and urban-industrial-logistics zones.
“In addition, the operational methods in IZs need to be upgraded,” Huong said. “During an M&A transaction, the scale of partners is not the highest priority for foreign industrial real estate developers. Instead, they prefer partners with experience, prestige, and a large amount of land.”
