Fund takes a slice out of Kinh Do

Baking hot: Kinh Do is one the country’s few internationally recognised retailers

Although specific details of the purchase price were not revealed, the source said the fund had paid more than $5 million, and with this investment, VOF will become the first institutional investor eligible to sit on the food company’s management board.
“We greatly appreciate Kinh Do’s performance and strong potential,” said Don Lam, managing partner of VinaCapital. “We will team up with its founders to develop the corporation.”
VOF’s interest in the food giant follows last March’s teaming with Kinh Do, which saw the fund buy a 30 per cent share in Unilever’s Walls ice-cream division. The newly named Kido’s subsequent performance has been strong and VOF received a first-year dividend equivalent to 23 per cent of its investment cost.
Kinh Do’s president and CEO, Tran Kim Thanh, said VOF’s investment would allow Kinh Do to raise further capital to implement joint venture projects with domestic and overseas partners to bolster its trademark and expand into regional and global markets.
He said with VOF’s investment Kinh Do will build a factory in the Vietnam-Singapore Industrial Park in Binh Duong Province and join some real estate projects.
With annual revenue of $60 million and a growth rate exceeding 20 per cent annually, Kinh Do is one of the largest and most successfully branded food companies in the country.
The company has more than 150 distributors and 40,000 retail outlets throughout the country, together with more than 25 bakeries in Ho Chi Minh City and Hanoi. Retail Asia magazine selected Kinh Do among Asia Pacific’s top 500 retailers in 2004.
Listed on the London stock exchange, VOF’s major investors include the US-based Millennium Partners, Germany’s Deutsche Bank Securities, Sun Wah Group and the Pacific Alliance Group of Hong Kong that together manage more than $4 billion in their investment portfolios.
Since its establishment in September 2003, VOF has invested nearly $40 million in more than 30 companies and projects covering financial services, real estate and manufacturing sectors in Vietnam.
According to recent research by the UK’s LCF Rothschild Country Funds, VOF was the top performing foreign-investment fund in Vietnam last year with a net asset value growth rate of nearly 25 per cent, outperforming its two peers VEIL, which was up 15 per cent, and PXP Vietnam Fund, which was down 4 per cent.
The fund is set to raise more capital to tap more investment opportunities, according to VinaCapital’s Don Lam.
“We are planning for the new fund-raising schedule to kick off in the second quarter of this year and targeted to raise further $30-35 million,” Don told Vietnam Investment Review.
The director said Vietnam’s expanding economy with its high GDP growth, rapidly developing financial systems, accelerated equitisation of state-owned enterprises, and dynamic private sector offered abundant investment prospects.
“We’ve seen more and more opportunities in 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.
Lam also said VinaCapital was considering establishing a property investment fund in Vietnam to take advantage of huge demand, the new Land Law, and the lack of serious money and expertise in property development.