Co-financing deals shore up belief in deep-rooted growth

At the event. Photo courtesy of JICA

The Japan International Cooperation Agency (JICA) and Vietnamese privately-held lender VPBank last week entered a $75 million loan agreement in a bid to fund micro-, small- and medium-sized enterprises (MSMEs) through the Private Sector Investment and Finance programme (PSIF).

The loan is being co-financed with Sumitomo Mitsui Banking Corporation, and it is JICA’s first PSIF project in Vietnam co-financed with a Japanese private financial institution after the programme was relaunched in 2012.

Sumitomo acquired 49 per cent stake in FE Credit, VPBank’s consumer finance arm, in a $1.4 billion deal in April. It is also rumoured to be the potential foreign strategic shareholder of VPBank.

In recent years, VPBank has been highly evaluated for actively developing products and financial services to reach out to women-owned MSME clients.

According to JICA, such enterprises are vital to the economy, accounting for 98.7 per cent of all the total, 45 per cent of GDP, and 63 per cent of employment. But they have limited access to money, and relatively few female-led MSMEs are able to fund companies.

“JICA provides more than 30 per cent of the total loan amount for women-owned MSMEs through VPBank. Likewise, the loan will help VPBank expand lending to such enterprises and will contribute to Vietnam’s sustainable economic growth,” the agency noted.

Other local banks are also strengthening their ties with international organisations. Last week, Techcombank successfully concluded its largest ever offshore syndicated loan facility at $800 million, a record size and landmark structure amongst Vietnamese banks. This is Techcombank’s second approach to the offshore loan syndication markets after its maiden accomplishment last year.

The loan proceeds, which will be used for general corporate and working capital purposes, will strengthen Techcombank’s capacity to satisfy its clients’ growing medium- and long-term financial needs in both foreign and local currencies.

Standard Chartered was joined by other designated lead arranger banks and underwriters, including Cathay United Bank, Maybank Kim Eng, State Bank of India, and Taishin International Bank, in originally underwriting the funding.

The fully underwritten syndication was offered in June this year with a $500 million initial transaction size and a pre-funding option. To accommodate the significant market reaction, the facility amount was increased to $800 million.

The senior unsecured facility comprises a $600 million 3-year tranche and a $200 million 5-year tranche. The facility provides a 135 basis point annual interest margin on the 3-year tranche and a 162 basis point annual interest margin on the 5-year tranche over the USD London Inter-Bank Offered Rate.

Bryan Liew, head of Leveraged and Acquisition Finance Syndicate at Standard Chartered, said, “The transaction was a landmark for the Vietnamese loan market, given its profile, size, and tenor. The fact that it successfully attracted over 20 diversified lenders in syndication and was upsized by 60 per cent is clear testament to the bank market’s confidence in Techcombank’s financial profile and growth trajectory.”

Bang Trinh, group CFO and chief Strategy and Corporate Development officer at Techcombank added, “The success of our syndicated loan showcases the continued belief international lenders have in Techcombank’s and Vietnam’s long-term growth prospects, despite the challenges presented by COVID-19. With this funding, Techcombank is well-positioned to support growing customer needs for medium- and long-term funding.”

In the same vein, the French Development Agency in Vietnam (AFD) and state-owned bank BIDV vowed to enhance their strategic cooperation in the implementation of AFD projects in this country, particularly in environmental protection, climate change response, and green growth.

In May, the two sides signed a credit facility agreement of $100 million aiming at promoting green investments, focused on renewable energy and energy efficiency sectors.

Hervé Conan, director of AFD Vietnam, applauded BIDV as one of AFD’s most trusted partners. In addition to green and sustainable development, AFD is collaborating with BIDV to maximise the credit line’s positive social and environmental impacts by assisting in the development of a social and environmental management system.

For AFD funds, BIDV has been trusted to implement a number of projects such as the Northern Power Transmission project and a housing development programme in flood-prone areas in the Mekong Delta, among others.