VFF to close up shop, new funds wait in wings

“We will close the fund by July. All operations of VFF in Vietnam will end after the fund liquidates its investment portfolios,” Finansa director Bui Thi Kim Oanh told Vietnam Investment Review.
VFF, which is listed on the Dublin Stock exchange, announced last week it would resell nearly 400,000 shares or 7.45 per cent stake it is holding in confectionary company Bibica.
Oanh, now the Bibica deputy chairwoman, said the deal was expected to be negotiated via the Ho Chi Minh City Securities Trading Centre for 10 days from June 28.
VFF was established in July 1994, after the doi moi policies were adopted. It employed Finansa to handle its investment operations in Vietnam. The firm managed a total capital of $50 million, most of which was invested in foreign-invested projects while partly on the local bourse.
Asked why the fund would not extend its operations and commit more investment to Vietnam after the redemption date, Oanh said: “This is the strategy of the fund founders and we should consider the [fund] closing is normal”.
Despite VFF’s withdrawal, Oanh said her fund management company, Finansa, would still continue its operations.
She told VIR that VFF partners and other new foreign investors were considering establishing another investment fund focused on the Vietnamese market.
“The would-be fund is expected to have initial capital scale of at least $20 million and begin its operations by the second half of this year,” she said.
While VFF is to close its operations for another fund, VIR has learned many foreign investment funds have made noises about entering the market.
They include Switzerland’s FMO and Germany’s DEG and a number of South Korean funds. Although not yet officially launched, these funds have begun approaching local businesses looking for investment opportunities.
FMO, for example, hopes to invest in credit organisations, and has discussed business with Sacombank, while DEG is interested in information technology companies.
VIR understands UK insurance giant Prudential is preparing to set up an investment fund in Vietnam.
Foreign investment funds are now operating in a better business environment. The legal framework for foreign investment in shareholding companies and listed firms is getting clearer, and the number of state-owned enterprises, especially big profit-making concerns, going public is growing.
Besides the more than VND2 trillion ($127.3 million) worth of shares of the 24 existing listed firms, there is a further VND15 trillion ($955 million) worth of shares of unlisted businesses, giving the funds a wide range of choice.
“The Vietnamese market still has great potential for foreign investment funds and foreign indirect investment in general,” said Don Lam, managing partner of VinaCapital, the management arm of Vietnam Opportunities Fund (VOF).
To cash in on the rising investment opportunities in Vietnam, Don said VOF’s investors have planned to increase their capital from $10 million to $30 million by next month. 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.