Hoa Binh Corp – Consolidating forces - Reaching the peak

On 31/7/2007, for the first time, Hoa Binh Construction and Real Estate Corporation (HBC) signed a contract of strategic partnership with two foreign shareholders: Chip Eng Seng Corporation Ltd (Singapore) and Citadel Investment Fund – USA (Hong Kong Branch). According to the contract, each of the said partners owns 500,000 shares, equivalent to 5% of HBC’s chartered capital, which will be VND 100 billion (after it has been increased). This is considered as the strategic cooperation in HBC’s first phase of development both in quality and quantity. To give readers more information about the event, DTCK magazine has had an interview with Mr. Le Quoc Duy, member of the Board of Administration, Investment Director of Hoa Binh Corp.

DTCK: First of all, could you give us some information about Hoa Binh’s plan to increase its chartered capital this time?

Mr. LE QUOC DUY (LQD): This time HBC is increasing its chartered capital from VND 56 billion to VND 100 billion by offering stocks for sale to the public. After paying dividend for 2006 by the ratio 10:1, awarding bonus stocks to existing shareholders by the ratio 12:1 and selling stocks by the ratio 5:1 to current shareholders at preferential price of VND 20,000 per stock, the remaining 2.2 million stocks will be sold to strategic partners: Petro Vietnam Finance Company (PVFC) - HCMC branch 1.2 million stocks, Chip Eng Seng and Citadel Investment Fund 500,000 stocks each. What is important is the fact that al these strategic partners pledge to keep these stocks for 5 years.   The purpose of capital increasing this time is to invest in 21-storey Hoa Binh Tower project in Phu My Hung, to buy machinery and equipment for the construction of modern high-rise buildings and to raise the working capital of the corporation.

DTCK: Will you please say something about the scope of business of Chip Eng Seng and Citadel?

Mr. LQD: Chip Eng Seng is one of the leading construction and real estate companies in Singapore with 40 years of experience. It is listed on the stock exchange of Singapore and within last year, the value of its stocks has doubled. Chip Eng Seng’s 40-year history of operation shows very clearly its long-term and steady line of development of the founder as well as his persistent efforts in maintaining and developing his career in the Singaporean construction and real estate market, which is constantly in harsh competition. Apart from that, Mr. Lim Tiam Seng, chairman of the Administration Board, who built the company from the scratch, is a typical example of struggling with great efforts to achieve success in the young country of Singapore. AS far as I know, in the last 3 successive years (2004- up to the present), C.E.S. has been evaluated as a construction company with the most transparency in Singapore, one of the developed countries with a business environment which is most healthy and most incorruptible in the world.

On average, Citadel stocks account for 2-3% of the transaction volume on New York stock exchange and NASDAQ. What is special about Citadel is the fact that almost ¼ of the USD 15 billion that Citadel is managing comes from its own employees and managers and thus a strong link of interest is formed between investors and managers. Since 1998, investment funds managed by Citadel have increased by more than 20% p.a. and during the same period of time investment capital has increased from USD 1 billion up to USD 15 billion as it is today.

DTCK: Have Chip Eng Seng and Citadel ever invested in Viet Nam, Sir?

Mr. LQD:  This is the first time Chip Eng Seng and Citadel have invested in Viet Nam and both companies have chosen Hoa Binh as a start  by becoming  Hoa Binh’s strategic partners and through long-term investment (from 2 to 5 years). Each company is to own 5% of the total of HBC’s shares.

GTCK: Why has Hoa Binh chosen Chip Eng Seng as its strategic partner?

Mr. LQD: Because there are similarities between Hoa Binh and Chip Eng Seng in several areas from products and services to business strategy and policy of business transparency with full responsibility to the society which means to include shareholders, clients, partners, employees and the community.

 These similarities will certainly help both sides to share each other’s concerns and make it easier for us to understand each other and the complicated problems that may arise in business operations.

Apart from similarities, we also have differences. Those are differences regarding national identity, market and degrees of development. They help us to complement each other where there are deficiencies and at the same time they also help us avoid clashes of basic interests. This will enable the two sides to cooperate in all aspects without any obstacle or limitation.

I am convinced that these similarities and differences will help our cooperation to bring about high effectiveness in several aspects, especially in seizing investment opportunities and developing real estate projects in Viet Nam.

DTCK: And what about Citadel, Sir?

Mr. LQD: Citadel Investment Fund is a big investment fund which is managing a capital as much as US$ 15 billion. With its financial capacity and plenty of experience, Citadel will be able to support effectively projects invested by Hoa Binh and those jointly invested by Hoa Binh and C.E.S. Citadel will not give financial support only but it can also, with its experience, provide consultation regarding financial management, assessing, selecting and developing investment projects. With such supports from Citadel Hoa Binh will certainly be in a better position to solve the financial problems, to reduce risks and to assure as best it can the chance of success for its projects.

Signing contract of strategic cooperation with partners which have strong capability, great prestige and is an act totally suitable to our line of development in years to come - a period of development in quantity and quality which we name the period of “consolidating forces - reaching the peaks”.

DTCK: Does HBC expect anything else from cooperation with Citadel?

Mr. LQD: Citadel Investment Fund has the ambition to expand its investment and its presence in Asia as well as to develop its real estate business. At present they have 2 offices and more than 50 experts in Asia and they are managing several major property businesses as I have mentioned. So far, Citadel has invested nearly US$ 500 million in property projects like office buildings in Beijing and Taiwan, in residential projects in Singapore, in leading companies in Hong Kong and in stock market in Singapore. Now they start investing in stock market in Viet Nam through Hoa Binh Corporation.

The investment of Citadel in HBC this time is the starting point for later development in the future. We believe that the potential of Citadel coupled with the thorough knowledge of HBC about the local business environment will certainly take us to a higher level of cooperation.

Citadel Investment Fund (Hong Kong branch) is an affiliate of Citadel Investment Group, which has its headquarters in Chicago – USA. It is managing an investment capital totaling US$ 15 billion and has been in operations for over 17 years. With high level of transparency and competence in capital management, Citadel is a prestigious investment fund which has developed very fast and has become one of the leading multifarious investment funds of the world. At present Citadel has 6 offices worldwide and has been deploying almost US$ 15 billion through large scope strategies in major property businesses – stocks, convertible bonds, credits, energy, foreign exchange, private shares and real estate.

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