Banking sector, a new address for investment

“We will move our head office from Europe to Vietnam.” The statement that surprised everybody was made by the president of Jaccar, Jacques De Chateugvieux, at the signing ceremony of the agreement on strategic partnership with Hoang Anh Gia Lai Joint Stock Company.

The president said that he did not speak prematurely when saying so, stressing that it was the company's actual plan. “Vietnam proves to be a very good destination for doing business. Vietnamese staff are both clever and diligent. Besides the good business opportunities, I find the labour force here very competitive,” he said.

Several months ago, during his official visit to Vietnam, the Danish Prime Minister cut the ribbon to inaugurate Private Equity New Markets (PRNM), an investment fund managed by BankInvest, which manages the total assets of $23bil, including $3bil to be injected in developing countries. PENM is managing the capital sum of $80mil, which is expected to be injected in unlisted companies in the fields of finance, consumer goods, tourism and hotels.

Prior to that, the appearance of the $112mil Vietnam Holding investment fund was also an event that drew a lot of attention from the financial investors’ circle. 60% of the fund’s capital has been raised from Swiss investors.

Most investment funds are aiming to buy shares of equitised companies or small private companies which need capital to restructure and expand their business scopes.

Don Lam, Director General of VinaCapital, said that VOF (the Vietnam Opportunity Fund managed by VinaCapital) only makes investment in leading companies in every field of the national economy.

VOF has poured money into Kinh Do Confectionary Group, Masan and Pho 24. Mekong Capital eyes small private companies in localities, which use many workers and make products for export.

Louis Nguyen, Managing Director of DFJ VinaCapital L.P stated that projects in information technology (IT) that were original and creative were the ones the venture fund would target.   

Tim Draper, the founder of DFJ, added: “We are venture investors. We know that young Vietnamese people are very clever, dynamic and hard working, and will follow new ideas of doing business. We have decided to pursue the big opportunities available here."

Though being concerned about the implementation of intellectual property rights in the IT sector and about the limited market opening in the IT sector, Mr Draper still believes that the opportunities are bigger than the challenges.

Initial successes

Financial analysts said that the market value of VOF has reached $304mil, though the fund’s capital is $250mil only. Don Lam, Director General of VinaCapital, has revealed that all the capital had been disbursed to the projects in Vietnam, and the company was raising more funds from investors.

VinaLand, the second investment fund set up by VinaCapital, now has $205mil in capital, which is planned to be injected in real estate projects. Most recently, VinaCapital joined forces with DFJ to set up DFJ VinaCapital L.P, which has the initial capital of $50mil. The new fund is seeking the investment opportunities in equitised IT and telecommunication companies. Both VOF and Vinaland are being listed on the London Stock Market.

The most typical example of investment funds’ success in Vietnam is Dragon Capital, which has been operating in Vietnam since 1994. Dragon Capital is managing Vietnam Enterprise Investment Limited (VEIL) with the total assets of $367mil. VEIL has made investment in 50 companies and projects, operating in different fields, from finance and banking, construction material production to real estate and consumers goods production. At the end of 2004, Dragon Capital set up its second fund in Vietnam, Vietnam Growth Fund Limited, with the total capital of $75mil.

In 1997-1998, when the local financial crisis broke out, many investors had to give up the game, but Dragon Capital decided to stay and it has been successful.

Mekong Capital has also been successful in Vietnam. The company has decided to set up another investment fund with the capital of $50mil after the first $18.5mil fund.

(Source: TN)

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