SINGAPORE (Jan 2): Chip Eng Seng’s subsidiary in Vietnam, Viet Investment Link Joint Stock (VietLink) is acquiring a 60% stake in a Vietnam development known as Soai Kinh Lam Apartment – Commerce Center, in District 5 of Ho Chi Minh City, for US$19.7 million ($26.3 million).

The development will have two residential tower blocks of 17 and 30 levels, a five-storey commercial centre, plus two basement levels will be built on the site. The site has a land area of 4,829 sqm, with a total gross floor area of 50,000 sqm.

Presently, construction of the foundation and the basement level in respect of the project have been completed.

VietLink will acquire the property by taking a majority interest in Giai Loi Investment Joint Stock (GL) from its owner Tran Vinh Hong.

Hong currently holds a 92.5% stake in GL, which in turn has an 80% interest in Soai Kinh Lam Construction Investment Company (SKL) holds the rights to develop and construct the project.

The remaining 20% is owned by District 5 Public Service Company Limited, a state-owned company incorporated in Vietnam.

Upon completion of the sale, Chip Eng Seng will have an effective interest of 60% in the project via its shareholding interest in GL.

Hong had, on Dec 29, granted an option to VietLink to exercise an option to purchase up to 75% of the shares in GL, following its VND 42.1 billion ($24.8 million) loan from VietLink, which was granted and drawn down in full on the same day.

In a filing on Sunday, Chip Eng Seng says its proposed investment in the project presents an attractive opportunity for the company to increase its presence in Vietnam, particularly in Ho Chi Minh.

The company believes that it will be able to generate strong sales from the residential component of the project, as, in its view, the development will provide residents modern and improved living within the district, while the commercial component is well-positioned to generate strong recurring income.

As part of the security for the loan arrangement, Hong has also pledged VietLink the rights to lease a total of 13 apartments in International Plaza, located in District 1, HCMC, Vietnam, for a remaining term of 28 years and 10 months.

The rental amount for the lease of these apartments over its entire lease term has been paid in full by Lien Heap Manufacture Trade Service company, which is owned by Hong and holds the rights to lease the said apartments.

Chip Eng Seng says it does not expect the provision of its loan to GL to have a significant impact on its NTA and EPS for the financial year ended Dec 31.  

Shares in the group closed 0.52% higher at 98 cents last Friday.