Vietnam has witnessed a robust year of private equity deals, with a spate of new funding rounds and exits in 2017.
In the first eight months of 2017, private equity deal count and value had already surpassed 2016 figures. Overseas investors have since then made more investments in real estate, retail and financial services.
The year also marked the entry of a number of international private equity firms, including European fund manager EQT, which acquired English language training company ILA Vietnam, and Blue HK Investments, which funded low-cost cinema operator Beta Media. In addition, a new local firm, called Maestro Equity Partners, was also established by private equity investors in the country.
Looking forward, Vietnam presents a lot of private market opportunities, thanks to its rapidly growing economy, a youthful population and the emerging next generation of entrepreneurs. Opportunities are also very promising in the privatisation sector, which has drawn huge interest in big businesses like Vinamilk and Sabeco. Some major subsidiaries of energy giant PetroVietnam have also said foreign fund managers were keen on their upcoming IPOs.
Looking back at the deal flow in 2017, it was a strong year with a host of new exciting developments. Here are DEALSTREETASIA‘s picks for top private equity events of the year:
KKR’s $250-million funding in Masan
The global private equity firm completed the $250 million investment into diversified group Masan and its nutrition platform Masan Nutri-Science in April 2017. This is the second largest private equity funding for a Vietnamese company in the year.
The investment is also significant in the sense that this is KKR’s third investment in Masan Group business, its sole portfolio in Vietnam. Through 2011 and 2013, the New York-headquartered fund manager had injected a total of $359 million in Masan Consumer before it fully exited in early 2016.
KKR is currently Masan Group’s second largest shareholder with a 4.8 per cent holding, after Singapore’s GIC that has a 5 per cent interest. At the same time, KKR owns 7.5 per cent of Masan Nutri-Science, the animal feed arm that acquired 25 per cent of state-owned meat producer Vissan.
The April 2017 deal saw Vietnam-focused investment firm PENM Partners exit Masan Group for $100 million.
Vincom Retail’s $740-million IPO
Vincom Retail, the shopping mall operator under Vietnam’s top property developer Vingroup, made headlines this year as it prepared to close the $740-million initial public offering, the biggest so far conducted by a Vietnamese company.
Cornerstone investors include Avanda Investment Management Pte, Dragon Capital, Genesis Investment Management LLP, GIC, HSBC Global Asset Management (UK), Karst Peak, RWC Asset Advisors (US), Templeton Investments and TT International.
Vincom Retail sold 21.8 per cent of its shares in this IPO.
The retail business is the first investment in Vietnam by Warburg Pincus, which led two funding rounds worth a total of $300 million in 2013 and 2015. Warburg Pincus and its co-investor, Credit Suisse, have converted their preferred stocks into a 20.22 per cent stake in Vincom Retail.
Vincom Retail also went public in conjunction with the close of the IPO, a practice that Vietnamese businesses uncommonly adopt. The stock immediately became one of the 10 largest in terms of market capitalisation (currently $3.87 billion).
Caldera Pacific, Samsung Securities buying Dragon Capital
Hong Kong’s Caldera Pacific and Samsung Securities were said to be acquiring a 40 per cent stake of Ho Chi Minh City-based Dragon Capital, according to South Korean media reports in September 2017. Without an investment value revealed, the acquisition still ranked as one of the biggest developments in the investment space in Vietnam.
Dragon Capital manages more than $2.3 billion in assets.
Samsung Securities was reported to take a 10 per cent stake as a limited partner, while the Hong Kong buyer will become a general partner of the Vietnam-based fund manager. Dominic Scriven and John Shrimpton, the two co-founders of Dragon Capital, held a combined interest of 70.5 per cent of the firm at the end of 2016.
Dragon Capital’s website introduces Raphael Gaglio, co-founder and managing partner of Caldera Pacific, as a non-executive director. Meanwhile, the Hong Kong investor has also enlisted Dragon Capital in its portfolio on its website.
VinaCapital and Mekong Capital investments and exits
Vietnam’s two major fund managers, VinaCapital and Mekong Capital, have reinforced their portfolios in 2017 by marking a series of new investments, as well as made several exits. In addition, both general partners will wind up their funds.
VinaCapital’s Vietnam Opportunity Fund invested $11 million each in Orient Commercial Bank, FPT Retail and construction firm Tasco. The fund also participated in private placements by Ho Chi Minh City-based construction engineering company Coteccons and Vietnam Glass and Ceramics for Construction Corporation (commonly known as Viglacera).
In addition, the general partner made an exit from Southeast Asia Telecommunications Holdings, the last remaining company in its Vietnam Infrastructure Fund, along with several real estate divestments for its VinaLand vehicle in 2017.
Meanwhile, Mekong Capital, the first private equity firm in the country, is also winding up its first fund, Vietnam Azalea Fund after selling pharmaceutical company Traphaco in a $64.5 million deal. Other exits were the sale of agri-business Loc Troi Group to Kingsmead Vietnam and Indochina Growth Fund, and Vietnam Australia School to TPG.
During the year, the firm announced new investments into pawnshop chain F88, Ben Thanh Jewelry, logistics companies Nhat Tin and ABA Cooltrans, and English language training centre operator Yola.
CapitaLand’s first $300-million Vietnam fund
CapitaLand Vietnam Commercial Fund I was launched in August 2017 at the close of $300 million, which will pave the way for the Singapore property developer to accomplish its target of $7.34 billion AUM by 2020.
By the end of September 2017, CapitaLand had recorded S$2 billion of gross assets in this country.
Capital Land holds a 40 per cent interest of the private equity fund, which will invest in Grade A commercial assets in Vietnam, while limited partners have the 60 per cent portion.
Vietnam, which is the third largest market for CapitaLand in Southeast Asia, rebounded in 2017 and is expected to continue to grow in 2018, thanks to improved demand. The Singapore firm in November acquired its 11th residential project. It also has 21 serviced residences and one international Grade A office development across six cities in Vietnam.