Mega ICBC stands behind Phu My Hung's $400 million consolidated loan

By Tran Anh - Sep 19, 2018 | 03:46 PM GMT+7

TheLEADERTaiwan based Mega International Commercial Bank has offered several short-term loans worth dozens of millions of US dollars to Phu My Hung to deploy projects in Vietnam since 2013.

Recently, Phu My Hung Development Company (Phu My Hung), owner of Phu My Hung urban area in Ho Chi Minh City, through its subsidiary Phu Hung Khang, has signed a consolidated loan agreement of $400 million to develop a megaproject in Hoa Binh province.

According to Finance Asia, the loan to Phu Hung Khang was arranged by a group of banks in Taiwan, China and Hong Kong such as Mega International Bank (Mega ICBC) and Taipei Fubon.

This is not the first time, Mega ICBC, one of the largest banks in Taiwan, has provided a loan to Phu My Hung. Since 2013, the bank has offered several short-term loans worth dozens of millions of US dollars to Phu My Hung to implement projects in Vietnam.

Specifically, on April 26, 2013, Phu My Hung signed a medium- and long-term loan agreement of $15 million under Loan Agreement No. 102 (L-367M.OBU). This loan was secured by Phu My Hung’s bank accounts in VND and USD accounts opened at Mega ICBC’s Ho Chi Minh City branch.

Mega ICBC offered two short-term loans worth $12 million and $10 million to Phu My Hung in March 2015 and May 2016. Similarly, these loans were also mortgaged by Phu My Hung’s accounts opened at Mega ICBC’s Ho Chi Minh City branch.

In 2017, the company again used its accounts in VND and USD opened at Mega ICBC’s Ho Chi Minh City branch to secure a revolving loan of $15 million.

In addition to Mega ICBC, Phu My Hung has recently borrowed loans from another major bank, China Trust Bank (CTBC), one of the largest private-owned banks in Taiwan. Loan value was not disclosed, but Phu My Hung had to mortgage the accounts opened at CTBC’s Ho Chi Minh City branch to secure the loan.

Phu My Hung was established as a joint-venture between Tan Thuan Industrial Promotion Company (TIP) with a 30-per cent stake and Taiwan-based Central Trading & Development Group (CT&D) with a 70-per cent stake.

Phu My Hung urban area is considered one of the most successful urban areas in Vietnam with many component projects focusing on mid-and high-end segments. The centre of this urban area covers 409 hectares with about 30,000 residents and half of them is foreigners.

The boom in housing demand in recent years has brought huge profits to real estate developers including Phu My Hung. Specifically, in 2016, the company reported revenue of VND7.43 trillion ($319 million) and after-tax profit of VND3.27 trillion ($140 million). Phu My Hung's profit margin surpassed NovaLand, a prominent real estate developer in Ho Chi Minh City.

According to TIP’s report, in 2015 and 2016, the company’s profits reported in the joint venture were VND752.8 billion ($32.4 million) and VND536 billion ($23 million) respectively. By 2017, the company recorded a receivable of VND411 billion ($17.7 million) as dividends from the joint venture.

After utilizing 70 per cent of land fund in Phu My Hung urban area, Phu My Hung has considered extending land fund to maintain the growth in the future. In 2016, Phu My Hung spent thousands of billions of VND to purchase controlling stake in many companies who are investors of real estate projects with areas of hundreds of hectares outside Ho Chi Minh City.

These projects include the 198.5-hectare Hong Hac - Xuan Lam urban area (Bac Ninh province), 212-hectare Ecological residential area and Sen Viet garden house (Dong Nai province) and 405-hectare Sannam Hoa Binh food plant (Hoa Binh province).

In 2017, Phu My Hung continued spending VND530 billion ($23.3 million) to acquire a 100-per cent stake in Gia Viet Real Estate Investment Limited.