Foreign Funds See Huge Opportunities in Vietnam

Vietnam is now considered an attractive investment destination of many foreign funds. Vietnam Business Forum would like to introduce the activities and strategies of some of foreign successful funds operating in Vietnam

 

Presently, Vietnam Association of Financial Investors (VAFI) has about 700 members including domestic and foreign individuals and organizations. Almost every member has its right related to securities investment. As a result, investors will benefit from the bettering securities investment. For its four years of operation, VAFI has exerted eight per cent of its time and work force to improve the investment environment, helping the development of the stock market by strictly following the State investment policies and collecting constructive opinions for bettering these policies. Nguyen Hoang Hai, VAFI Secretary General said that we are always considered unexpected guests as we forward lots of petitions (though not welcoming) for State newly issued policies about eqitisation process, creating demands for stock market, mechanism reforms, law of investment, stock, enterprises, tax…In general, VAFI is closely related to member’s rights and helps boost Vietnam’s financial growth.

 

“Supporting Vietnam Enterprises is the right way to success” said Chris Freund, Managing Director of Mekong Capital. Since the presence of the Fund in Vietnam, Mekong Capital has invested in 13 companies, including Tan Dai Hung plastics, Ngo Han electromagnetic wire, Minh Hoang garment, Saigon Gas, Lac Viet IT… Especially, the Mekong Enterprise Fund made Tan Dai Hung's revenues have grown by 165 per cent over the period that Mekong Enterprise Fund has been an investor since 2003. The success of all companies invested by this fund is an evident of right way investing in Vietnam.

 

The increasing concerns of Mekong Capital in the Vietnamese market are represented by the increasing investment capital sources. The first Mekong Capital fund had investment capital of US$18.5 million, while the second fund had US$50 million. And, now Mekong Capital also established its third fund, the Azalea Fund, with investment capital of US$100 million. We plan to launch Mekong Enterprise Fund III around the time that Mekong Enterprise Fund II is nearly fully invested, which is expected to occur in late 2008, Chris Freund said.

 

Mekong Capital strives for excellence in investment management and has no plans to expand into other financial services. Chris Freund added: “we currently have no intention to be in the securities business, corporate finance or provide any fee-based consulting services. This single-minded focus on investment management also helps to minimize risks associated with conflicts of interest”.

 

Vietnam has always kept its average annual economic growth of 7.5 per cent in the past 10 years but its infrastructure system fails to keep pace with economic change. This is a huge opportunity and VinaCapital is not missing it. VinaCapital is studying projects on expressways, airports, power plants and telecom systems, and is awaiting opportunities to invest in State-owned infrastructure assets which are equitised, said Don Lam, Director General of VinaCapital. We already set up the US$402-million Vietnam Infrastructure Limited, which is listed on the London Stock Exchange with the transaction code of VNI. This is the first public infrastructure fund in Vietnam, which will invest in energy, transport, telecom, water supply and others.

 

Other fund managed by VinaCapital, Vietnam Opportunity Fund, however, only makes investment in leading companies. Most investment funds were making investment in shares of listing companies and OTC shares. Meanwhile, injecting money in the real estate sector proves to be the second choice of investment funds, though this is a long-term investment.