Funds profit from food products shares

In the past two months, Private Equity New Markets II (PENM II), under the management of Denmark's BankInvest – which owns three investment funds in Vietnam – has sold 4.5 million shares of MSN out of its total holdings of 49.5 million shares, realising gains of over VND500 billion ($23.8 million) over the past two years.

PENM managing director Hans Christian Jacobsen said the investment strategy of the fund is focused on food and consumer goods companies with a strong band name and clear vision and development strategies.

BankInvest's current Vietnam portfolio includes 13 companies operating in food processing, consumer products, finance and construction, with an average investment per company of $2-25 million.

Dairy giant Vinamilk (VNM) has proven to be a favourite invesment target for foreign funds. TNK Capital Partners director Tran Vinh Du said the success factors of Vinamilk are its strong brand name, good marketing strategy and overwhelming market share.

"Foreign investors want to buy more VNM shares but VNM is always in the situation that it has reached its limit for foreign ownership," Du said.

The real estate market was expected to continue to remain frozen for the foreseeable future, forcing many investment funds to restructure their portfolios in order to cut their losses.

By early November, five property funds had seen their certificates trading at significantly high discount rates compared to their total net asset value (NAV), according to LCF Rothschild, which tracks over 100 investment funds around the world. Aseana Properties (ASP), VinaLand (VNL) and Vietnam Property Holding (VPH) all had discount rates of 45-57 per cent.

"It's too late now to simply say ‘don't invest in offices or apartments’," Andy Ho, managing director and head of investment for VinaCapital, told the newspaper Nhip cau dau tu (Investment Bridge). "We predicted this was going to happen, and we have been divesting capital [from the property market] for the past two years."

Ho said VinaCapital will no longer invest in office and apartment projects that are new or under construction but will only look at established projects.

VinaCapital, which now owns VinaLand, has successfully sold its 70-per cent stake in the five-star Hilton Hanoi Opera, earning a return of about $8 million on its three-year investment, he noted.

VPH, managed by Saigon Asset Management (SAM), also said most listed property companies in which VPH has invested have reported much lower profits compared to last year. Nine-month profits of Industrial Urban Development Co No 2 (D2D), NBB Investment Corp (NBB) and Century 21 Co (C21) are all down 65-85 per cent year-on-year.

"The situation is very bad this year and we don't have any positive information to provide," said SAM chairman and general director Louis Nguyen.