UPDATE 1-Warburg Pincus-led group places $200 mln bet on Vietnam retail growth

Wed May 29, 2013 2:09am EDT

* Vincom Retail has seven assets valued at around $1.1 billion

* Warburg, an investor in Asia since 1994, makes first Vietnam investment

* Deal is biggest first-time investment by global pvt equity firm in Vietnam

By Stephen Aldred

HONG KONG, May 29 (Reuters) - A consortium led by U.S. buyouts fund Warburg Pincus said on Wednesday it has agreed to buy around 20 percent of the retail unit of Vietnam's Vingroup Joint Stock Co for $200 million, betting on retail growth in the Asian country.

The unit, Vincom Retail, is Vietnam's largest owner and operator of shopping malls with seven assets valued at around $1.1 billion, and the deal bucks a trend in the country where real estate sector growth has slumped as credit growth slows and banks are mired in non-performing loans.

Hanoi-based Vincom shares ended the morning session down 2.24 percent on the benchmark VN index in Ho Chi Minh City before the announcement was made.

Vincom's assets include high-end malls Vincom Center B in Ho Chi Minh City and Vincom Center Ba Trieu in Hanoi, targeted to tap Vietnam's growing consumer market.

The deal is Warburg's first investment in Vietnam, and it is the largest initial investment to date in a Vietnamese company by a global private equity firm.

Warburg, which manages over $40 billion in assets and has been investing in Asia since 1994, said the investment in Vincom Retail should benefit from the country's "favorable long-term economic outlook," rapid urbanisation and growing middle class.

Warburg has the right to participate in future capital raisings by Vingroup for up to $25 million, while the consortium has the right to invest an additional $100 million in Vincom Retail for expansion and future retail property-related deals.

Vincom has two further projects due to launch this year, Vincom Mega Mall Royal City and Vincom Mega Mall Times City.

Vingroup is Vietnam's largest private-sector real estate operator and one of the largest companies by market capitalisation on the Ho Chi Minh City Stock Exchange.

Citigroup Inc was hired as the sole financial advisor to Vingroup, while Credit Suisse Group was sole financial advisor to Warburg Pincus.

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