Vingroup and SK's leaders at the agreement signing ceremony on Thursday. — Photo courtesy of Vingroup

Viet Nam’s real estate, tech and retail conglomerate Vingroup JSC (Vingroup) on Thursday signed a billion dollar deal with the Republic of Korea’s SK Group.

The South Korean technology and telecommunication firm will acquire 154.3 million primary shares in Vingroup and 51.4 million shares of the Vietnamese firm’s VinCommerce for VND23.3 trillion (US$1 billion) or VND113,000 per share.

After the transaction, SK will own a 6 per cent stake and become a strategic partner of the Vietnamese firm, Vingroup said in a statement.

The deal will increase Vingroup’s charter capital to nearly VND34.3 trillion.

The transaction is subject to customary regulatory approvals and the listing of primary shares issued on the Ho Chi Minh Stock Exchange. Credit Suisse acted as sole advisor to Vingroup.

“We believe partnering with a local champion, such as Vingroup, to explore new business opportunities is an ideal strategy for SK’s expansion in South East Asia,” said Woncheol Park, Representative Director of SK Southeast Asia Investment.

“We are expanding in Viet Nam with a long-term goal of contributing to the local agenda and the economic advancement of the nation. In this regard, we have a lot of respect for Vingroup and the significance of their role in Viet Nam’s economy,” he said.

“Through this strategic partnership, we look forward to working closely with Vingroup and creating vast synergies for both groups and for Viet Nam.”

Vingroup’s Vice Chairman and Chief Executive Officer Nguyen Viet Quang said Vingroup welcomes SK as a strategic partner and the South Korean firm’s deep-bench experience, solid business foundation and technological achievements will offer invaluable assistance to Vingroup so that the Vietnamese firm can achieve new heights, especially in the fields of industrials and technology.

Vingroup is the largest private-owned group in Viet Nam by market capitalisation, and ranks in the Top 10 Largest Enterprises in Viet Nam (including both FDI and State-owned enterprises).

The company is listing nearly 3.2 billion shares on the Ho Chi Minh Stock Exchange with code VIC. Its shares gained 1.4 per cent to close Thursday at VND116,900 per share, valuing the firm at VND373.1 trillion.

In 2018, Vingroup announced its vision to become a world-class technology-industrials-services group. In the first quarter of 2019, Vingroup reported VND1 trillion in post-tax profit, up 13 per cent year on year.

Last year, Vingroup sold $400 million worth of preferred shares to Hanwha – another South Korean investor.

SK Group is one of the largest conglomerates in South Korea, with businesses across telecommunications, technology, semiconductors, logistics and services.

In 2018, SK Group bought $470 million worth of food and beverage producer Masan Group. — VNS