More foreign investment funds to enter Vietnamese market
Some 70 foreign investment funds are seeking licenses to enter Vietnam, expecting to earn big profits from the promising market, Tuoi Tre newspaper quoted figures released at a finance conference late last week.
Huge profits booked by current foreign investment funds in the Vietnamese market have encouraged more foreign investors to seek business opportunities in Vietnam.
Word has gotten around that last year, two foreign funds paid investors around 140 percent, which meant the investors earned $1.4 for every $1 they poured into the fund.
Another fund, whose investment concentrates on real estate projects, paid some 60 percent, or 60 US cents more than every $1 invested.
Currently, most figures of indirect foreign investment in Vietnam are all estimated because the OTC (over the counter) market is currently out of the state management agencies’ control.
The three largest foreign investment funds in Vietnam are managing nearly $4 billion, including Dragon Capital with some $1.5 billion, followed by VinaCapital with $1.3 billion and Indochina Capital with some $1 billion.
It is the rapid growth of those funds that prompted many other international financial organizations to join the race to share the attractive cake.
Mekong Capital – a Vietnam-focused fund manager – is an example. It has recently completed capital mobilization for its third fund, the $100 million Vietnam Azalea Fund.
Mekong Capital, established in 2001 by individuals both in Vietnam and internationally, manages the Mekong Enterprise Fund, a private equity fund launched in April 2002 with initial capital of $18.5 million, and the Mekong Enterprise Fund II, a private equity fund launched in June 2006 with $50 million investment capital.
The Vietnam Azalea Fund differs from the Mekong Enterprise Fund and Mekong Enterprise Fund II, which focus primarily on private companies which were never under state ownership.
This fund, with an operational period of 10 to 15 years, will invest in firms that are set to list with the keen interest in those in the primary stages of going public.
After Azalea Fund, a series of other funds are awaiting licenses from the State Securities Commission, including a Japan’s investment fund with initial capital of $200 million.
Many financial entities from China and Hong Kong have entered Vietnam through the establishment of financial consulting companies.
Most are ready to attend auctions of giant Vietnamese state-run companies in the near future. Financial experts expect that some additional US$2 billion would pour into Vietnam this year.
Attractive arenas
The securities and real estate fields are among the top choices of many foreign investment funds in Vietnam.
Tuoi Tre quoted a fund official as saying most of the investment funds were eyeing the shares of listed companies and on the OTC market.
Meanwhile, two investment funds - Mekong Capital and BankInvest – have selected the so-called “hard-to-eat” market segment because both focus on investing in well-managed private enterprises.
BankInvest has recently announced its first projects to invest in the AAA Insurance Company and the Duc Thanh Wood Processing Company.
Mekong Capital have so far invested in 12 Vietnamese businesses, including plastics maker Tan Dai Hung, garment maker Minh Hoang, Saigon Gas and Lac Viet Informatics company.
Some domestic management funds have also sought investment opportunities. For instance, the Phu Lan management fund has established a new fund named Lion Capital.
Lion Capital was preparing to mobilize $200 million from Vietnamese and foreign investors, said fund CEO Louis Nguyen.
“We intend to go to the United States, Asia and Europe to raise capital for the fund and now have more than 10 projects awaiting capital disbursement,” he said. |
