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Categorized | Property

VinaCapital to sell Hanoi Metropole stake

Posted on November 28, 2012

A stake in the Hanoi Metropole, Vietnam’s best-known hotel, is being put up for sale by fund manager VinaCapital as it tries to sell premium assets after the collapse of the Communist country’s property market


VinaCapital’s London-traded Vietnam Opportunity fund has appointed Jones Lang LaSalle, the property agents, to market its 50 per cent stake in the 365-room, French colonial-era hotel, said David Dropsey, VinaCapital’s investor relations manager.

    The fund manager has told investors that its stake in the Metropole was worth $58.7m at book value.

    Real estate agents said that it would not be easy to sell the stake for a significant premium over that price given the distressed nature of the Vietnamese economy. The other 50 per cent of the hotel is owned by the Hanoi government, which exercises full control over the business.

    VinaCapital is one of several boutique fund managers that raised billions of dollars from international investors when Vietnam was one of hottest emerging markets, before 2008.

    As with its main rivals Dragon Capital and Indochina Capital, VinaCapital’s internationally listed funds have tumbled in value as the Vietnamese economy has hit the buffers, weighed down by inflation crises, rising bad debts and the bursting of the property and stock market bubbles.

    With many Vietnam-focused funds persistently trading at big discounts to their reported net asset values, fund managers are under pressure from shareholders to make disposals.

    Investors who have looked at the Metropole, where Charlie Chaplin, Somerset Maugham and Graham Greene all stayed, said that it was an attractive trophy asset, but they would think twice about paying a big premium for VinaCapital’s stake because of the extent of the Hanoi government’s control.

    The Metropole stake is the second-biggest investment held by the Vietnam Opportunity fund, which has a market capitalisation of about $550m.

    This month VinaLand, another London-listed fund managed by VinaCapital, passed a shareholder continuation vote after vowing to make no new investments and return all surplus cash to investors over the next three years.

    Some international investors have been looking to pick up distressed property assets at bargain prices.

    But Marc Townsend, who heads the Vietnam office of property agent CB Richard Ellis, said many foreign investors remained uncomfortable with the complex ownership structures and legal uncertainties in Vietnam.

    “People come every week to look at these assets, but when they peel back the skin, they don’t get quite the ownership structure or control that you want,” he said. “So a lot of these properties will never be acquired by Singaporean funds or Japanese investment trusts.”