16 Jul 2013
EXS Capital, an independent alternative investment group dedicated to Asia, has led a US$37 million investment into Son Kim Land, an up-and-coming Vietnamese real estate developer with a solid track record and an existingpipeline of development projects.
EXS Capital began focussing on Vietnam in late 2011, viewing it as a fundamentally strong economy suffering from temporary market dislocations. It saw similarities between Vietnam’s capital crisis of 2010-2012 and China’s economic crises in 1994-1995 and 2003-2004, when China’s strong demographics and growth story were obscured by challenging fiscal policies and financial dislocation.
“Our experience in China during that era taught us that smart investors who could see past the temporary dislocation and use it to make opportunistic investments in great companies, did extremely well over the long term,” said Eric Solberg, a founding partner and CEO of EXS Capital. “As contrarian value-driven investors, we saw the biggest gap between the real economy and asset prices in more than a decade- as a good time to go in.”
In addition to the initial US$37 million, EXS Capital has further commitments that may bring the investment up to US$50 million with further potential of up to US$80 million. “We’ve found that Asian high net worth investors are increasingly preferring direct deals rather than investing in a blind pool fund,” says Solberg. In a challenging legal and regulatory environment, both the investors and the management team are demanding a more sophisticated trade off. In this structure, investors receive far greater downside protection while the management receives additional upside participation and retains majority control throughout.
After interviewing 27 real estate developers, EXS Capital partnered with Son Kim Land, a reputable company with extensive business connections that has allowed it to secure strategic sites in line with the city’s master development plan. Originally a Vietnamese clothing dynasty which started in the 1950s, today, Son Kim Group is a leading retailer with over 400 stores across Vietnam, an OEM manufacturer of women’s lingerie with brand names such as Jockey, Vera, J.Buss and WOW, a joint venture partner with GS Shop of South Korea to operate one of the leading home shopping networks in Vietnam, and the local operator of SB Furniture. The group’s strong retail expertise gives it block-by-block knowledge of key commercial neighborhoods. Son Kim Land is the real estate arm of Son Kim Group.
Son Kim Land has six development projects in the pipeline including two large scale mixed- use developments comprising apartment, serviced apartment, retail and office space in the centre of District 2 of Ho Chi Minh City, with direct access to the new Metro currently under construction. Also in District 2, Son Kim Land is developing a high-end residential building slated to become one of Ho Chi Minh’s most luxurious properties. Son Kim’s other pipeline projects include a hotel and a mixed-use commercial and office development in District 1, as well as a luxury beach resort.
EXS Capital is led by Solberg and Kiyoshi Hirasawa, each a 20-year veteran in private investment in Asia, backed by a multi-disciplinary and multi-lingual team. Since its inception in 2007, it has led, on a deal-by-deal basis, eight privately negotiated investments totaling over US$350 million in equity (almost US$1.3 billion of enterprise value) funded by leading global investors.