Warburg to invest over $370m in Techcombank in Vietnam’s biggest PE deal

Global private equity major Warburg Pincus has agreed to invest over $370 million in Vietnam Technological and Commercial Joint Stock Bank (Techcombank or TCB), marking the largest ever PE investment in Vietnam to date. The transaction, to be made through two legal entities owned by the PE major, will bring Warburg’s total commitment in the country to over $1 billion.

Techcombank is one of Vietnam’s largest private sector joint stock commercial banks. In a statement, the bank said that the investment from Warburg is part of its equity raising efforts to fund its expansion and further solidify its leading position in Vietnam.

“Vietnam is one of the fastest growing banking markets in Southeast Asia and TCB is well positioned with its leading retail franchise and best-in-class management team with strong local and international banking experience. We expect TCB to further consolidate its dominant position in Vietnam and become one of the leading banks in Southeast Asia,” said Jeffrey Perlman, Managing Director and Head of Southeast Asia at Warburg Pincus.

A Reuters story quoting a source familiar with the development said the buyout firm picked up a less than 10 per cent stake in the Vietnamese bank to become one of its largest shareholders.

Established in 1993, Techcombank is one of the largest private sector JSBs in Vietnam by total operating income and profit before tax as of 2017. Moody’s rated Techcombank one of the highest among Vietnamese private joint stock banks.

“The Vietnamese economy and the banking sector are experiencing tremendous growth right now. This year we celebrate our 25th Anniversary, amidst a market where the demand for banking services is sharply accelerating with increasing spending power in our population. TCB is in an excellent position to serve this demand, and we look forward to working with Warburg Pincus to further consolidate and build upon our current financial strength,” said Ho Hung Anh, Chairman of Techcombank.

Earlier this month, the bank announced that it plans to list its shares on the Hồ Chí Minh City Stock Exchange (HoSE) this year. Additionally, it plans to sell over 158 million treasury shares to investors to raise at least $162.74 million.

Warburg Pincus started investing in Southeast Asia in 2013 with Vietnam as its maiden market. Since then, the PE firm has invested in seven companies in the region, including Vincom Retail, Lodgis Hospitality, ARA Asset Management, Go-Jek, NWP Retail and Trax. The PE firm with $40 billion assets under management, invested $300 million in Vincom Retail, the largest shopping mall operator in the country which is also a subsidiary of domestic property giant Vingroup. Further, its highly successful $740-million listing on the Ho Chi Minh Stock Exchange last November was the largest-ever IPO in Vietnam.

Despite fastest growing banking markets, Vietnam’s banking penetration rate remains very low, at just over 30 per cent according to 2017 figures, compared to other Southeast Asian countries including Indonesia (56 per cent), Thailand (71 per cent) and Malaysia (77 per cent), thus offering a strong headroom for growth.

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