Novaland Group, a leading real estate developer in Vietnam, received the second disbursement of US$101 million from the international syndicated loan worth $250 million in late March 2020.
The first disbursement of $149 million took place in the fourth quarter of 2019. Credit Suisse AG (Singapore) is the Originated Mandated Arranger and Bookrunner (OMLAB).
In a time when the whole world is very volatile, including global financial markets, the continued disbursement of this international syndicated loan by international commercial banks demonstrated their strong confidence in Vietnam’s market and real estate sector, and Novaland in particular. More encouragingly, the group of foreign banks participating this time includes a number of banks which have either never invested or invested a modest amount in Vietnam or Novaland.
Mr. Troy Griffiths, Deputy Managing Director of Savills Vietnam, said: “Globally, financial markets have been experiencing considerable volatility: stock markets have fluctuated with wide daily amplitude, the volatility index has reached the high level since the 2008 financial crisis, market liquidity has been exhausted, etc.”.
In this comprehensive context, the second disbursement of $101 million from international commercial banks with competitive interest rate to Novaland has created impressive attention on the capital market.
“This drawdown affirms the investors’ strong conviction in the development and project execution capability of Novaland,” Mr. Griffiths added.
Determining that capital from international commercial banks offer bigger loans than non-bank institutions, with longer terms and lower interest rates, (including hedging cost), since 2019, Novaland has focused its necessary resources on taking advantage of this funding source.
The transaction of $250 million drew major attention and was oversubscribed by 14 major international commercial banks. Notably, this transaction is highly complicated, requires that Novaland be competent in many aspects, approval processes which involved many parties, levels and senior appraisers.
Through this transaction, the involved international commercial banks also showed trust in Novaland’s strategy, with a focus on three key product lines, including residential projects in Ho Chi Minh City, satellite townships, and hospitality real estate projects based on a total landbank of nearly 5,000 ha, which is sufficient for the Group to develop in the next 10-15 years.
|Residential projects in Ho Chi Minh City – one of three key product lines of Novaland|
While facing the Covid-19 pandemic, the Group has been simultaneously implementing numerous solutions to ensure continuous business operations with a focus on analyzing and creating financial scenarios, including: (i) strengthen cash and cash-equivalents management, forecast and optimize cash flow in different market scenarios; (ii) optimize operating expenditures; (iii) and enhance relationships and provide timely information to local and foreign investors and financial institutions. In addition, Novaland has quickly activated a business contingency plan to ensure uninterrupted operation of the Company and customer transactions, such as (1) establishing the Covid-19 Anti-epidemic Steering Committee; (2) implementing measures to protect customers, partners and employees through the application of information technology; (3) planning and providing financial scenarios; and (4) stabilizing customers, contractors and suppliers in the new situation.
“Novaland highly appreciates the investors' strong confidence and commitment to Vietnam and Novaland with this syndicated loan second disbursement, especially in this extraordinary time,” said Mr. Bui Xuan Huy, CEO of Novaland.
“We strongly believe Novaland is well-prepared not only to overcome this difficult situation with our tested experiences and advanced planning, but also to thoroughly take advantage of the opportunities presented to us during this challenging period. We will work more diligently and harder to retain the invaluable trust of our customers, partners and investors in Novaland, and successfully achieve our mission and vision,” Huy said.