Local fund looking to local cash

The fund hopes the saturated housing market will free-up local money

VietFund Management Company (VFM) management board member, Phan Minh Tuan, said the firm was waiting for the State Securities Commission to issue a legal framework for the operation of this closed-end fund.
VFM’s initial target was to raise $6.5 million to $9.7 million from corporate, institutional and individual investors, locally and overseas. It plans to invest 60 per cent in listed and unlisted securities and the remaining 40 per cent in other assets, mainly in private firms.
Tuan told Vietnam Investment Review foreign investors had registered all 30 per cent of the fund and the company was organising roadshows in Hanoi and Ho Chi Minh City to raise investment from local institutions and individuals.
Tuan said its certificates provided to investors would immediately be listed and traded in the Vietnamese stock market once the fund had finished raising capital.
VFM business development director Pham Khanh Lynh said he was confident the fund would raise the expected capital from local investors.
“Bankers have told us there is a lot of money deposited in commercial banks that has not been invested effectively. In addition, the idle money people are holding is huge.”
Lynh said he had contacted a number of local private companies who are willing to spend tens of billions of dong on investment.
He said despite the Vietnamese stock market fluctuating recently with constantly falling stock prices that discourage local individual investors, the strong economic, export and tourism growth was providing a firm foundation for its development.
Lynh said the birth of over 73,000 private companies in the last four years, the increasing number of listed companies which had profit rates growing faster than GDP and the lowest-ever stock prices provide an opportunity for investment in the stock market.
He said investment in other areas should not be attractive any more.
The housing market was almost saturated since land prices were among the highest in the world and new measures such as taxes on land transactions would decrease return on investment in this segment.
In addition, he said, the insurance market was growing very fast with premiums reaching more than $270 million that should be invested in other sectors.
The financial market was being consolidated with foreign financial institutions such as VinaCapital and Mekong Capital were coming back to Vietnam, leaving an open opportunity for investing in the Vietnamese stock market.
VFM is the first joint venture investment fund management company in Vietnam, a partnership between Sacombank and Dragon Capital Management. Its administrator and custodian bank is Vietcombank and auditor and accountancy advisor Ernst & Young.
Sacombank is one of the largest private sector banks in Vietnam with total assets of over $400 million and a nationwide presence serving over 200,000 customers.
Dragon Capital is an investment bank which also manages Vietnam Enterprise Investments Limited.
The Dublin-listed fund has total assets of over $80 million, including $15 million invested by the International Finance Corporation, the private sector financing arm of the World Bank Group.