Warburg Pincus & VinaCapital partner for new hospitality JV

Photo by DuyDo (Ho Chi Minh City)

Affiliates of U.S.-based global private equity firm Warburg Pincus and VinaCapital, one of the largest private equity firms in Vietnam, have agreed to invest up to $300 million in a Southeast Asian hospitality venture.

“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 companies claimed in a statement. “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 venture will be funded by a 100-percent 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 domestic hotel management company focused on developing and operating specialized boutique resorts and upscale city hotels in Vietnam under its Fusion brands.

“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,” Jeffrey Perlman, Managing Director and Head of Southeast Asia of Warburg Pincus, said in a statement. “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.” 

The venture will “aggressively grow” its asset base through acquiring, repositioning and enhancing urban 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.” Perlman suggested that an IPO would also be likely in the future.

The hospitality market in Vietnam and the region has been 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. China's outbound tourism numbers are expected to grow by over 100 million over the next 10 years to over 220 million, 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.