Financial terms of the divestment were not disclosed. Vietnamese consumer goods and dairy-focused investor Blue Point has acquired the stake, VinaCapital said.
The Ho Chi Minh City-headquartered investment manager added that Vietnam Opportunity Fund (VOF), the flagship vehicle that funded IDP, reaped a return of approximately 1.5 times on the invested capital.
Following the partial exit, IDP is still VOF’s largest private equity holding (at 4.1 per cent of the fund’s net asset value compared to an earlier 5.5 per cent recorded in its May report).
“We invested in IDP while it was in distress and I am pleased to see that our team has done a tremendous job restructuring and transforming this business and grow it into one of the leading players in Vietnam’s dairy sector,” said Andy Ho, chief investment officer and managing director at VinaCapital.
The investor added that IDP posted a strong performance in 2019 “from a revenue and EBITDA perspective”. VinaCapital said it was able to take IDP through a capital restructuring programme that enabled the company to fully repay a shareholder loan to VOF of over $15 million while working on the divestment.
In 2014, VOF and Daiwa PI Partners invested $45 million into the Vietnamese dairy firm, locally known for its Ba Vi and Love’in Farm brands, to collectively own 70 per cent stake. VOF was said to contribute 80 per cent of the investment.
VOF is a multi-asset class fund, which invests across public and private equities, real estate and structured investments.
The private equity portfolio accounted for 21.2 per cent of the fund’s total NAV by the end of May, up from 17.6 per cent by the end of last year.
Prior to the IDP divestment, VOF injected $8.5 million in Petrolimex Aviation, the second-largest fuel services company in Vietnam, for a significant minority stake in a pre-IPO deal.
The fund said in its 2H2019 financial report released in March that it aimed to deploy between $100 and $120 million into four to six private equity deals within the following 12 months, subject to market conditions.
“We are looking at several consumer-oriented businesses including healthcare as well as a steel structure business. We also hope to make the first investment into a recycling business, the largest of its kind in Vietnam, in 2020” it said in the report.
“We expect that entry valuations and potential returns will be under pressure in the coming years,” it added, implying that valuations of private transactions are getting closer to public market asset valuations, with small or no liquidity discounts for being private.
“Our base case returns are now expected to range between 15 per cent and 25 per cent over the next three to five years.”