Bui Cao Ngoc Quynh, the daughter of Nhon, president of Novaland, a realtor, has registered to sell 9.1 million Novaland shares (NVL).

The company, second in real estate in Vietnam after Vingroup, fell into difficulties and had to undergo restructuring.

The quiet real estate and bond markets, plus excessive debts, have hurt real estate firms. 

If Quynh succeeds in selling shares, her ownership ratio in Novaland will decrease from 24.6 million units (1.26 percent of capital) to 15.6 million (0.79 percent).

On April 26, Novagroup, the biggest shareholder of Novaland, registered to sell 9.4 million NVL on May 6-31, right after succeeding in selling 4.4 million NLV. 

After the latest deal, the proportion of shares held by Novagroup would decrease to 17.88 percent of capital, or 349 million NLV.

Just within the last two years, the ownership ratio of the group of shareholders related to Nhon has dropped by 400 million shares.

Most NLV of the group of shareholders related to Nhon lost 80 percent of value in September-December in 2022, from VND85,000 to VND14,000 per share.

Many securities companies sold NVL to take back loans. This was an additional factor that caused the prices of the shares to decrease sharply, in addition to the bad news about high debts, limited cash flow, and the quiet real estate market.

The two major institutional shareholders which are Nhon’s two companies, Novagroup and Diamond Properties, also had to sell large amounts of shares in the last two years to help debt restructuring.

Since the beginning of the year, Novagroup and Diamond Properties have sold 30 million NVL, which is expected to support Novaland’s debt restructuring.

The shares held by Nhon and relatives dropped from over 60 percent to 40 percent compared with mid-2022, which meant a decrease of 400 million shares of the 1.95 billion shares in circulation.

The number of shares held by members of Nhon’s family has dropped by 10 percent, or 200 million. Most shares were sold in late 2022 and early 2023. At that time, doubt was raised about the ‘runaway’ of Nhon’s family. However, the comeback by Nhon to directly manage the real estate firm later has cleared the suspicion.

Because of the lower NVL price and ownership ratio, Nhon has been excluded from Forbes’s list of dollar billionaires since November 14, 2022 (with the assets worth $946 million). 

It was a time when the VN-Index dropped to a low of 873 points from 1,520 points in early April 2022. Prior to that, Nhon was reported as having assets of $2.9 billion in early 2022.

NVL prices have been staying at low levels since then, and the amount of shares held by Nhon continues to decrease.

Novaland’s financial health

With the sale of 400 million shares by the group of shareholders related to Nhon, valued at VND8-10 trillion, the market has recognized 18,000 new shareholders, raising the total number of shareholders of the real estate firm to 80,000.

A large amount of money has been used for restructuring and Novaland has continued to sell products at projects with full legal status, but the financial situation of the firm remains a worry for investors.

In the 2023 audited financial report, auditors showed concern about Novaland’s going concern.

Meanwhile, Novaland’s board of management said it is applying solutions at the same time to solve problems. 

Novaland is restructuring debts, extending debt payments, swapping debts, and working with banks on credit to implement projects. Novaland also receives financial support from large shareholders.

The realtor reported that it had VND3.4 trillion as of the end of 2023. However, the money might have been used to pay debts. Regarding Novaland’s inventories, the figure had reached VND139 trillion by the end of 2023.

Novaland’s long-term debts had dropped sharply from VND135 trillion to VND109 trillion by the end of 2023. It reported a record high loss of VND600 billion in the first quarter of 2024.

US$1 = VND25,400

Manh Ha