Novaland in debt chaos: major shareholders are planning share exchanges!

Novaland in debt chaos: major shareholders are planning share exchanges!

Novaland, one of the largest real estate developers in Vietnam, is facing a significant change in its capital structure. The company plans to issue shares to convert debt with its major shareholders, including NovaGroup and Diamond Properties. This move will be referred to the state securities commission to address the company's financial challenges. The aim of the issue is to settle debts incurred through the sale of collateral. Major shareholders, committed to supporting Novaland through difficult times, have sold shares in recent years to pay off debts. In particular, shares were sold between 2022 and 2024, significantly reducing the stake of Bui Thanh Nhon and his allies from 60.8% in June 2022 to 38.7% in December 2024.

On May 19, 2025, NVL shares experienced an increase of VND 100 to VND 12,250 per share. Novaland plans to announce details of the number of shares to be issued soon. The company has been criticized for saying such an issue could result in short-term share dilution. However, Novaland emphasizes that transparency and fairness towards shareholders are top priorities.

Capital sales and minority shareholders

According to the current plan, NovaGroup intends to sell 2% of its stake in Novaland, which could result in Bui Thanh Nhon and his family becoming minority shareholders. According to reports, the sale of 38 million shares between March 30 and April 28, 2025 could be part of a broader portfolio balancing and debt restructuring strategy. This is accompanied by an increase in NovaGroup's share price, which was boosted by the deferral of bond repayments and the approval of the capital increase.

If the sale is successful, NovaGroup could fetch up to VND500 billion (about $21.3 million). This would reduce NovaGroup's shareholding to 27.43%, while Nhon's family's shareholding would decrease to 50.72%. However, Novaland's statutes require a 51% controlling interest, which could influence future strategic decisions.

Economic framework conditions

In 2022, Novaland reported revenue of VND11.15 trillion and after-tax profit of VND2.29 trillion. These numbers represent declines of 25% and 34%, respectively, compared to the previous year. In addition, the company reports total capital of VND257 trillion, of which 82.6% comes from debt. The last sales of shares by NovaGroup took place in November 2022, when 150 million shares were registered, of which only 98 million were sold. Despite these financial setbacks, Novaland remains a key player in Vietnam's real estate sector.

Overall, both Novaland and its main shareholders face significant challenges. The upcoming changes and corporate strategies will be closely monitored as the market remains volatile and the company, together with its shareholders, is working on solutions to overcome the negative impact of recent years. It is critical for stakeholders to maintain transparency and fairness as they navigate this period of financial restructuring.