Real estate services company APAC Realty, the operator of the ERA brand, has increased the stake it holds within ERA Vietnam to 60% from a 38% stake it acquired in February 2020.
The Singapore Exchange (SGX) Mainboard-listed company also announced on January 9 that it will acquire 22% of the shares issued capital Eurocapital Joint Stock Company.
Eurocapital has been designated as the sub-franchisor for the ERA brand to ERA Vietnam. APAC Realty has, in its turn, granted Eurocapital the permission to sub-franchise ERA brand.
Grand Dunman Singhaiyi Group submitted the winning bid of $1.284 billion, equivalent to $1,350 per square feet per plot ratio (psf ppr).
Following the completion of the transaction, APAC Realty will increase its stake after the completion of the transaction, APAC Realty will increase its shareholding in ERA Vietnam and Eurocapital to 60% each.
In total, the amount due for the upfront payment totals $4.9 million and includes an incentive to earn out that could reach $10.5 million. “The earn-outs were arranged so as to motivate sellers to reach their goals of performance and to further boost the success and growth in the case of ERA Vietnam and Eurocapital,” APAC Realty. APAC Realty.
The figure for earn-outs, $2.8 million is subject to certain conditions, and based on the net earnings generated from ERA Vietnam and Eurocapital from July 1, 2023 until June 30th 2024. A further $7.7 million as an incentive to earn out is scheduled to run starting on January 1st, 2025 until December 31st 2025.
APAC Realty had invested $1.5 million to acquire 38% stake in ERA Vietnam in February 2020. In the fourth quarter of 2020 the Group also arranged an investment of $1 million to expand.
In conjunction with the purchase, APAC Realty plans to extend an equity loan in the amount of $1.5 million ERA Vietnam. As per APAC Realty, the loan proceeds will be used to help the plans of ERA Vietnam to expand its operations and launch new projects and increase market share.
ERA Vietnam has the right to draw down the loan under the date of agreement until June 30th 2023. The loan will be due 5 years after the date of drawdown with the rate of 5% annual interest.
The six-month period ending on June 30th, 2022 ERA Vietnam posted net profit of $0.1 million and revenues of $5.5 million. Eurocapital had the loss as $0.03 million, and revenue of $0.4 million during the same time period.
The acquisitions proposed will fuel growth for the business of the Group in Vietnam as well as increase the strength of the ERA brand across the region and encourage multi-country collaboration between the different subsidiaries of the group and affiliated businesses across Southeast Asia, says APAC Realty. The increase in stakes will also enable APAC Realty to combine ERA Vietnam and Eurocapital in its financial statements, according to the report.
Vietnam CEO cuts stakes to 15%
The people who are selling this acquisition include Pham Thanh Tuan Pham Thanh Tuan, head of the executive board for ERA Vietnam; along with Vu Duy Khuong, Vu Duc Hieu, Vu Trung Phong, Tran Dong An and Tong Nam Tran.
Pham sells the equivalent of 4% out of the 19% stake. This means his shareholding after acquisition is fifteen% for the two companies, ERA Vietnam and Eurocapital. Pham will therefore retain the majority of his part of ERA Vietnam and Eurocapital.
After acquisition The remaining 25% of each of ERA Vietnam and Eurocapital will be owned in the hands of KTP & Partners Joint Stock Company. KTP is an investment-holding company that has contributed to ERA Vietnam’s expansion and growth since its inception according to APAC Realty. “KTP is a strategic local partner that will be a key part of APAC Realty’s plan in the Vietnam real property brokerage market moving forward.”
Established in 2017, ERA Vietnam is based in Ho Chi Minh City. Under the direction of Pham the agency has increased its base of agents from just over 1,500 salespeople at December 31, 2020, to more than 3,900 salespeople as of December 31 2022.
For FY2023, ERA Vietnam has secured marketing orders for 23 new residential projects that total 6,460 units, as per APAC Realty.
“The capital for growth that was lent through our first purchase was the trigger that drove ERA Vietnam’s massive expansion over the past two years in terms of sales and headcount of agents,” says Marcus Chu the chief executive officer for APAC Realty. “We believe that our next investment will assist ERA Vietnam’s subsequent phase of growth , and help us to create more profit to APAC Realty shareholders over the long-term.”For its 2023 pipeline Era Vietnam has already secured marketing contracts for 23 new residences comprising 6,460 units. This includes the 9 Stellars by Sonkim Land, Zeit River Thu Thiem by GS E&C, Cadia by Phat Dat, iD Junction by Tay Ho along with Grand Marina Saigon by Masterise.