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Foreign funds targeting private businesses
No longer targeting publicly traded Vietnamese companies, many foreign funds have recently begun investing in privately run businesses in Vietnam.
The Aureos South East Asian Fund (ASEAF), a fund managed by Aureos Capital Management Company, recently decided to invest $4.2 million in Tran Anh Digital World Company. Explaining the decision to invest in a privately run business like Tran Anh, Do Doan Kien, Chief Representative of Aureos Capital in Vietnam, said Aureos Capital sees great potential in the company. Vietnam is a country with a young population and a market with an increasingly high demand for computers and electronic products.
According to Kien, Aureos Capital had to thoroughly consider the business strategy and corporate governance of Tran Anh before making the decision to invest in the company.
Another investment deal that has gained notice is the $9.1 million investment deal in Nam Long Investment Company, also a private company.
Vietnam Azalea Fund, a fund managed by Mekong Capital, has purchased 2.7 million shares of Nam Long in order to hold 6.7 percent of the chartered capital of the company.
Some months ago, VinaCapital Vietnam Opportunity Fund VOF, managed by VinaCapital, announced an investment deal worth $15 million in Prime Group, a brick manufacturer. Similarly, Dragon Capital recently decided to invest in Sacomreal, a real estate firm, in order to raise the company’s foreign ownership ratio to 7.5 percent of equity.
The noteworthy aspect of these deals is that foreign funds do not consider investment deals in privately run businesses as small deals used primarily to diversify their investment portfolios. In fact, injecting money in private companies is the main target of many investment funds.
For example, Mekong Capital said it is planning to set up a new fund with $150 million in 2010. The new fund will be named Mekong Enterprise Fund - MEF III, and the main targets of the fund will be privately run companies in Vietnam.
Meanwhile, ASEAF has revealed that after wrapping up the deal to invest in Tran Anh Digital World Company, the management company will raise more funds to increase the fund’s capital to $250 million.
Do Doan Kien said the main focus of ASEAF will still be small and medium sized enterprises.
“Vietnam will be one of the six most important markets in ASEAF’s investment strategy, together with Thailand, the Philippines, Indonesia, Laos, and Cambodia,” Kien said.
Commenting on the potential of Vietnamese private businesses, a representative of a foreign investment fund said that these businesses have great potential to develop in the future. “In the next 10 years, some Vietnamese private businesses will emerge as the leading companies in South East Asia in their business fields,” he said.
Paul Coleman, a financial expert with PricewaterhouseCoopers Vietnam, said that many business sectors in Vietnam, such as the retail sector, now have the presence of private businesses, which means more opportunities for foreign investors.
vietnamnet, Dau tu
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