Flood of foreign funds forecast

Sitting pretty: Bao Viet is an attractive proposition for investors

More than 100 prestigious financial institutions from all over the world gathered at the two-day conference in Ho Chi Minh City last week to explore investment opportunities, with most coming from North America and Europe, and total funds under management amounting to more than $300 billion.
Robert Knapp, managing director of the US-based Millennium Partners, said at the conference that he expected investment opportunities would present themselves as a number of high-quality state-owned enterprises are to be equitised in the next one or two years, including Vietnam’s largest commercial bank, Vietcombank, Bao Viet Corporation and state-owned petroleum companies and mobile phone operators.
“Vietnam is still on our radar. The country’s improved investment environment, robust economic growth, increasing investment opportunities and, more importantly, high returns, actually impress us,” said Knapp.
Millennium Partners now manages around $4 billion and is one of the major investors in the London Stock Exchange-listed Vietnam Opportunities Fund (VOF) managed by VinaCapital.
“We have to date invested around $20 million into VOF and are now seeking to pour more money into the fund,” he told Vietnam Investment Review.
Markus Winkler, partner of Switzerland-based VGZ, which manages billions of US dollars, agreed. “Vietnam is undergoing exciting and unprecedented changes,” he said.
“With the second-fastest growing

economy in the world, an increasingly progressive government, a number of important recent trade agreements and preparation for accession to the World Trade Organisation, the case for investment in Vietnam has never been stronger.”
Winkler, also known as Mr Vietnam in Switzerland, said his fund has already invested nearly $40 million into Vietnam through the VOF and was seeking to add more Vietnamese private equities to its portfolios, including VinaLand, a new $50 million property fund initiated by VinaCapital.
Michael Gibson, partner of Hong Kong-based LIM Advisors, which runs a $600 million fund, said there were a lot of opportunities in Vietnam. “That’s why I’ve come here but we should think of the returns the opportunities can bring to us,” he said.
Thailand-based Merchant Partners Securities Ltd is looking for Vietnamese companies in the service industry to introduce them to its clients, said president and CEO Kasemsit Pahomsak.
Horst Geicke, chairman of VinaCapital – the organiser of the first-ever event on foreign portfolio investment in Vietnam – said the event was “a great opportunity to learn why Vietnam is the best and last emerging country of important size to participate in the globalisation process”.
“The conference is not only ‘shop talk’ for our fund, we want you [investors] to see the place, meet the people, feel the vibrancy, wrestling energy of the young and hard-working people of Vietnam and also its fascinating culture,” he told investors at the conference.
Geicke and VinaCapital executives hope investors would open their pockets to invest in Vietnam following the successful performance of their fund over the last two years. The $95 million fund has so far invested more than $80 million in over 30 firms in the country, and it plans to raise an additional $50 million for other investment opportunities.
“Many investors who were not convinced the first time were convinced the second or third time, and they are very happy now on seeing the return that VOF delivers,” said Don Lam, VinaCapital’s partner.
He also shared with investors the focus sectors where his VOF managed to produce a return of 24.5 per cent last year, as well as his firm’s view on the investment outlook for the next three years.
“We’ve seen more and more opportunities in the banking, consumer goods, education and real estate sectors. We will look for high-quality assets and enhance their value with investment and involvement,” he said.
According to statistics, the flow of foreign indirect investment (FII) into Vietnam represented just 3.7 per cent of the total foreign investment, while this proportion in such neighbouring countries as Thailand, Malaysia and China varies from between 30 per cent to 40 per cent.