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Capital inflow to Vietnam slows as downturn bites: Fund managers
Fund managers said the inflow of portfolio investment into Vietnam has been affected by the global economic crisis, but a recovery is expected soon.
“There has been a huge slowdown in foreign capital coming to Vietnam in the last nine months,” said Bradley Lalonde, General Director of Hanoi-based BIDV-Vietnam Partners Investment Management Joint Venture Co.
“We have also seen a pressure in the last six-to-nine months as deal flow has dried up considerably despite the private sector’s need for capital.
“About 90 percent of some 330,000 small- and medium-sized enterprises have need for more capital to grow and expand, but we don’t see much activity.
“Today is the best time to invest, but the worst time to raise capital,” he said.
Lalonde was speaking at “Alternative Investment Vietnam 2009,” a two-day conference on portfolio investment in Ho Chi Minh City last week.
“Investors are very picky these days,” Lalonde said, noting that they now have a lot of choices but less capital after losing lots of money.
“We are seeing a huge slowdown in equitization. We have seen very limited pure private-equity opportunities, merger and acquisition, and buyout opportunities.”
According to figures from Prudential Vietnam Fund Management Co., the total foreign indirect investment into Vietnam as of last month had shrunk to US$3.5 billion from $4 billion at the end of 2008.
The figure peaked at $6 billion at the end of 2007 but started to go down last year as a result of the global economic crisis.
But Lalonde and many other fund managers said they still see great investment opportunities in Vietnam. They expect the inflow of foreign capital into the country to increase in the next six months and become robust again in the next two years.
As bank credit remains tight, unlisted companies alone may need to attract as much as $2 billion from investment funds, they said.
Bui Cong Giang, Chairman and CEO of Anpha Capital, said many transactions were delayed late last year but negotiations have been resumed recently.
Another good sign is many new foreign investment funds have started to come to the country showing interest in opportunities here, Giang said, adding that at least three foreign funds are seeking to work with his company.
Bui Thi Thu Ha, Associate Director of Investments at Prudential Vietnam Fund Management, said private equity investment in Vietnam is still able to generate a sustainable return.
Ha said that in the next few months her company would sell its stakes in three companies with an average profit of “up to 20 percent.”
Lalonde said Vietnam is well positioned to come out of the global financial turmoil better than other countries and with more opportunities.
“Despite the turmoil in the market, Vietnam is doing a pretty good job in managing the crisis,” he said. “Vietnam still has nice growth. It is among few countries that are actually growing.”
Vietnam could achieve 4.5 percent growth this year, leaving it in better shape than most Asian economies despite the global downturn, the Asian Development Bank said.
The financial industry with its low penetration rate and early development stage, infrastructure including road building and power industries, and consumer products and services with “excellent demographics” are good investments, Lalonde said.
Nguyen Mai Bao Tram, Investment Director at Ho Chi Minh City Infrastructure Investment Company, agreed, saying that Vietnam needs at least $500 billion for its road system, $100 billion for railways and another $100 for water supply and sewage treatment projects.
CEO of International Asset Management Company Bui Kien Thanh said the capital for development that the country needs in the next 10 years may reach $1 trillion, half of which should be generated from foreign indirect investment.
thanhnien, vietnamplus
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