American private equity firm Warburg Pincus, which has invested a total of $300 million in Vincom Retail, the shopping mall operator of Vietnam’s property giant Vingroup, sees Vietnam as a key long-term focus for it in the region, the company said at the Credit Suisse Asian Investment Conference.
“This is a region that we feel will be important for the firm going forward. We want it to be targeted so we want to be focused initially on Vietnam, which we see as an extension of China,” the Private Equity International newswire quoted Jeffrey Perlman, head of South-East Asia at Warburg Pincus, as he spoke at Vietnam investment panel discussion.
Especially compelling narratives are rising domestic consumption driven by the country’s growing middle class and the “transformative shift” of China’s manufacturing base as costs rise, which is benefiting Vietnam, a Credit Suisse’s website post, quoted Perlman, as stating.
In 2013, Warburg Pincus, through its Private Equity XI Fund, pumped $200 million into Vincom Retail for a 20 per cent stake, standing as one of the largest PE investments in the country. It added a $100 million follow-on investment last year.
The financing has helped the expansion of Vingroup’s retail network, which saw the business more than tripled the size of its portfolio since the US private equity firm started to fund, Vingroup’s chief executive Duong Thi Mai Hoa said when the duo announced the second round of investment.
Meanwhile, the follow-on funding was expected to facilitate Vingroup in building a retail platform, which includes fashion and e-commerce in addition to shopping malls.
Vietnam has become a magnet for international private equity firms, given the vibrant demography which accelerates strong growth of retail, and loosened regulations for foreign investment.
In addition, investors have also noticed the country’s significant role in the ASEAN Economic Community and the Trans-Pacific Partnership agreement, which – according to Le Thi Bang Tam, chairwoman of food major Vinamilk and commercial lender HDBank – will put pressure on Vietnamese enterprises to become more competitive.
Along with Vietnam-dedicated funds like VinaCapital, Mekong Capital, VIGroup, Saigon Asset Management and PENM Partners, global PE companies are increasingly interested in this Southeast Asian market.
New York-based global investment firm KKR is known for its, also one of the largest, investment and successful exit from diversified group Masan, while CVC Capital Partners has made its first move to enter the country by hiring local managing partner to look for investment opportunities. Other firms that already made investments in Vietnam include Global Emerging Markets, Templeton Emerging Markets Group, AIF Capital and Cassia Investments.