NEW YORK – Warburg Pincus, a leading global private equity firm focused on growth investing, and VinaCapital, one of the largest private equity firms in Vietnam, jointly announced that affiliates of Warburg Pincus, VinaCapital and its founder Don Lam have closed a partnership to create a fully integrated hospitality platform (the “JV”) spanning development, acquisitions and operations across Southeast Asia. The JV is founded on a common vision to become the pre-eminent hotel platform in Vietnam with a target to expand into other leading hospitality markets in Southeast Asia. The long-term goal is to capture the outsized growth in tourist arrivals, especially from China, to the region over the next five to 10 years.
The JV will be seeded initially with up to approximately US$300 million of capital commitments from Warburg Pincus and VinaCapital and best-in-class hospitality assets including a 100% stake of Serenity Holding as well as select resort and city hotels in Vietnam. Serenity, previously co-owned by Don Lam and Marco van Aggele, is a leading domestic hotel management company focusing on developing and operating specialized boutique resorts and upscale city hotels in Vietnam under its Fusion brands.
The JV seeks to aggressively grow its asset base through acquiring, repositioning and enhancing well-located city hotels in key tier-1 cities and developing luxury resorts in leading resort destinations across Southeast Asia. The hotel market in the region is highly fragmented and the JV also plans to acquire and partner with other prominent hotel management companies and platforms to further enhance its management capability and expand its brand and asset coverage.
Don Lam, Founder of VinaCapital, commented, “We are excited to work with Warburg Pincus, a best-in-class private equity firm with deep experience in Asia, to build the leading hotel platform in Southeast Asia. The platform is off to a strong start and we look forward to contributing our strong acquisition capabilities and local resources to build a hospitality platform of the highest quality and scale in the region.”
VinaCapital is one of Vietnam’s most experienced and successful investors in the hospitality sector. It has made 16 hospitality investments over the last 10 years involving more than US$220m of equity investment into Vietnam through a range of financing structures. This experience extends to city center trophy properties and business hotels, coastal resorts and residential communities, golf courses and serviced apartments. Its seasoned hospitality team has been involved in developing, owning and/or operating six of the top ten hotels in Vietnam.
Jeffrey Perlman, Managing Director and Head of Southeast Asia of Warburg Pincus, commented, “With tourist arrivals to the region expected to more than triple over the next 10 years, hospitality and tourism will be at the forefront of driving the region’s outsized growth. Mr. Lam, Mr. van Aggele and VinaCapital have strong local market knowledge and a proven track record of investing in all aspects of the hospitality sector. We look forward to working closely with them to expand the footprint of the JV across the region with the goal of an eventual IPO.”
Warburg Pincus has a strong track record investing in real estate across Asia, including in hospitality companies in both China and India. It has invested more than US$2.5 billion into 20 companies and projects in the region including developers, operators, asset managers, and joint ventures in all major real estate asset classes. The firm’s notable investments in the property sector include Guangzhou R&F, e-Shang Redwood Group, Red Star Macalline, D&J China and Mofang Apartments in China, Vincom Retail (Vietnam) and Nirvana Wastu Pritama (Indonesia) in Southeast Asia and a joint venture with Embassy Group in India. Additionally, Warburg Pincus has invested in three leading hotel companies in the region including 7 Days Inn, China Jinmao and Lemon Tree Hotels.
Marco van Aggele, Founder and CEO of Serenity, commented, “We are privileged to partner with Warburg Pincus and VinaCapital to expand our highly differentiated wellness hospitality concepts. The partnership will open up new doors for us to expand our concept in Vietnam and across the region.”
Benefiting from the country’s rich tourism resources, the hospitality market in Vietnam and others across the region have been going through an important transition period driven by strong international tourist arrivals, a rapidly growing domestic middle class, pro-growth policies and accelerating infrastructure build-up. The connectivity in the key urban and resort destinations have also been greatly enhanced, coupled with the explosion of low-cost carriers which has fundamentally changed how people travel in the region. It is estimated that China’s outbound tourists will grow by over 100mm over the next 10 years to over 220mm, with ASEAN countries being the biggest beneficiary with estimated arrivals from China expected to quadruple from approximately 10 million to 40 million during this period.