Shinhan Investment Corp. is seeking to take over the Hyatt Regency Danang Resort and Spa in Vietnam. The company continues to focus its investment on hotels in Danang after it released a financial product earlier this year to allow investors to indirectly invest in FourPoints by Sheraton in Danang.
Shinhan Investment recently increased capital by issuing 660 billion won (US$554.39 million) worth of new shares in order to bolster its investment banking (IB) business.
Shinhan Investment is planning to acquire a 58 percent stake in a special purpose company (SPC) for US$16 million (19.95 billion won) to purchase Hyatt Hotel in Vietnam, according to IB industry sources on May 15. The SPC will take over the hotel in Danang after taking out a loan worth US$100 million (119.05 billion won) from local financial institutions. Hyatt will run the hotel even after Shinhan’s acquisition and those who make an investment in the SPC, including Shinhan Investment, will share the profit from the hotel.
The Hyatt Regency Danang Resort and Spa is a five-star resort which is popular among not only Korean tourists but also foreign tourists as it has 200 guest rooms and is well-located. The fact that it is operated by global hotel chain Hyatt is another factor that raises its booking rate. The Hyatt Regency in Danang posted more than 40 percent higher sales in 2018 than 2015 and 10 billion won (US$8.40 million) in operating profit in 2018.
IB industry analysts expect Shinhan Investment to keep expanding overseas alternative investments. Company officials say that the latest investment is meaningful in that it is an equity investment, not a simple arrangement of acceptance financing. With Mirae Asset Daewoo having already been pushing for resort development in Phu Quoc, Vietnam, Shinhan Investment also considers alternative investment in real estate as a new growth engine. The investment in Four Points by Sheraton in Danang by Shinhan Investment earlier this year has a different profit system with the investment in Hyatt Hotel as it gives out loans on the hotel as security, liquidates them and portion out the profits to investors.
In addition, Shinhan Investment has ample funds to make an alternative investment. The company recently received 660 billion won (US$554.39 million) worth ofpaid-in capital increase from its holding firm, Shinhan Financial Group. Based on this, its equity capital has increased to 4 trillion won (US$3.36 billion). Shinhan Investment will also be able to issue apromissorynote as a mega IB. The company’s capital is enough even compared to that of Korea Investment & Securities Co., Mirae Asset Daewoo Co., NH Investment & Securities Co., Samsung Securities Co. and KB Securities Co. which are all regarded as mega IBs. With the latest capital increase, Shinhan Investment is planning to expand alternative investments which put up a good show in other countries.