Vietnamese private equity firm Vietnam Investments Group (VI Group), which has largely backed consumer-focused non-tech businesses, is planning to pursue more tech investments to cash in on the digitalisation boom following the pandemic-induced shifts in user behaviour.
VI Group, which has $550 million assets under management and about 30 companies in its portfolio, is ready to cut smaller cheques ranging from $3 million to $15 million in potential tech investments, a spokesperson told DealStreetAsia.
However, private equity investments will continue to remain the main focus of the firm, the person added.
VI Group, whose average investment size is in the $20-million range, has backed companies such as travel services player Thien Minh Group and restaurant chain QSR Vietnam and one of Vietnam’s largest logistics firms Gemadept, among others.
For its tech investment strategy, VI Group is looking at investing $3-5 million at Series A and $10-15 million at the Series B stage as it chases tech-driven themes. The Ho Chi Minh City-based investment firm is likely to strike its first such deal in the edtech space as early as this month.
VI Group is also looking at tech investments to achieve synergy with its largely offline portfolio firms. “Participating in the technology space will give us a strong synergy and support offline companies in our portfolio,” a spokesperson of the firm told us in an interaction.
“Although the tech investment space in Vietnam is still in early-stage, we see many opportunities in later-stage as there is not too much competition at the domestic level,” the spokesperson added.
Its target areas – edtech, healthtech, retail and logistics – are sectors that have seen a huge spike in demand due to the pandemic-induced restrictions. Vietnam’s internet economy grew 16% from 2019 to $14 billion and will likely reach $52 billion in 2025, per the 2020 report on Southeast Asia’s Internet economy, released by Google, Temasek and Bain & Company.
Founded in 2006, homegrown VI Group has invested in an array of sectors such as manufacturing, transportation and logistics, tourism and hotels, education, quick service restaurants, and affordable housing.
|Sector||Current Investments||Prior Investments|
|Consumer||Thien Minh Group||Saigon Paper|
|Transportation and Logistics||Gemadept||Vinafco|
|Manufacturing||Eton||Khai Toan Group|
|Boo||Tien Phong Plastic|
|Financial services||VN Direct|
|Real Estate||Nam Long|
It typically picks significant minority stakes in its portfolio companies with an investment tenure of five to seven years. It currently manages three funds, the most recent one being VI Fund III with a corpus of $252 million.
According to its website, VI Group has earlier invested in three tech companies including Vietnamese “new retail” firm Seedcom, which owns Temasek-backed logistics company Scommerce, and others; Teko, one of the members of GIC and SoftBank-backed VNLife Group and, Tap Tap, an app through which users can accumulate points.
Apart from VI Group, other PE firms looking at the tech space include VinaCapital Ventures and BDA Capital, set up by former Northstar Group MD Bert Kwan. Meanwhile, others like Mekong Capital, Caldera Pacific, Excelsior Capital & Daiwa-SSI continue to place their bets on profitable SMEs in Vietnam.
Before the coronavirus pandemic, VI Group was said to be exploring options to exit its six-year-old investment in Hanoi and Ho Chi Minh City-based school Wellspring International Bilingual School in 2019. According to an earlier report, VI Group had fully exited from seven investments.
Its exit scorecard comprises listed firms such as Petrolimex, Tien Phong Plastic, Nam Long Group, Vinafco and Saigon Paper. It earlier also exited Vietnamese e-wallet MoMo, which recently closed its over $100-million Series D funding round co-led by Silicon Valley investor Goodwater Capital and existing backer Warburg Pincus. Its other exits include online recruitment portal Sieu Viet which bagged $34 million from Singapore-headquartered emerging market private equity firm Affirma Capital in 2020.