According to Mr. Nguyen Duc Minh, the contribution of PE funds will help the capital market develop healthier, facilitate capital mobilization for businesses as well as create investment opportunities when businesses have quality. IPO and listing on the stock market.
Recently announced, SSI Fund Management Company (SSIAM) together with its partners CT Bright (CTB) of Charoen Pokphand Group (CP Group) and Mercuria Investment Co., LTD (MIC) established the Fund. Vietnam Growth Investment Fund (VGIF).
VGIF is a member fund that invests in private companies (Private Equity – PE), with an estimated size of 150 million USD, 10-year term, 5-year investment period. To better understand the investment strategy and direction of the fund, we interviewed Mr. Nguyen Duc Minh – Investment Director – SSI Fund Management Company Limited (SSIAM).
The big players join forces to create resonant value in PE investments
Reporter: Recently, the market has received the news that SSIAM shook hands with two foreign partners to invest in private equity (Private Equity – PE), you can share investment strategies such as capital scale. Investing in businesses, the proportion of industries in the portfolio, limit the number of VGIF deals?
Mr. Nguyen Duc Minh: The Fund will focus on investment in industries that go hand in hand with the long-term growth of Vietnam’s economy – a country with a young population, rapid urbanization rate and underdeveloped infrastructure, leading to a large investment demand in infrastructure development.
In addition, Vietnam is emerging as a country that attracts large foreign investment capital thanks to its stable politics and improving business environment.
As a result, the focus sectors the fund aims to include include consumer, retail, real estate, infrastructure, manufacturing, and technology, and are not exclusive of opportunities in essential sectors.
VGIF Fund’s goals focus on 3 main points, including companies with competitive advantages and great growth potential in the coming years; the opportunity to list or privatize state-owned companies with attractive pricing; Listed through PIPEs (Private Investment in Public Equity), or spin-offs (the parent organization establishes an independent company by separating part of its business from is expected to create greater value) the listed subsidiaries of the group
The fund aims to capitalize on a deal of more than $ 10 million and can co-invest with other Private Equity fund systems in the system to scale up capital at a larger deal.
Reporter: As introduced, VGIF aims at the opportunity to list or privatize state-owned companies with attractive valuation, can you tell us more about this strategy? What is the difference from buying OTC shares or M&A?
Mr. Nguyen Duc Minh: The flexibility in investment strategy is also a difference of VGIF fund compared with some funds that simply invest Private Equity in the market. The Fund can invest in listed markets, as well as participate in divestments of state-owned companies.
With the strength of the Fund’s GPs (General Partner – a member with the right to manage and administer the fund), the Fund can participate in enhancing the business performance of state-owned enterprises which have many ineffective points.
The difference from buying OTC shares (merely a secondary transaction) comes from the fact that the fund is always aiming for the values that can contribute to the business after the fund makes an investment.
In addition, the fund is only a financial investor, so it usually only targets a level of ownership that is not the dominant of the business and the purpose of the fund is not M&A.
Reporter: Through observation, each fund has its own taste and changes in stages. For example, VOF – VinaCapital used to have a taste for hotels, food and beverages, recently health care, and pharmaceuticals. As for VGIF, what is your taste right now, sir?
Mr. Nguyen Duc Minh: Basically, our orientation is to support businesses in terms of their capital and the value of their funds, VGIF does not limit itself to a specific industry but will flexibly seek specific opportunity that the Fund considers the business itself to have good long-term growth.
The post-investment process also distinguishes the fund from its portfolio of active investments in the past with the accompanying participation and value creation of its portfolio investments.
In addition, the advantages of generating synergy (resonance – PV) from the system and experience in the agriculture, retail, and food chain of CP as well as the network and capacity of DBJ are extremely large supporting the rapid and sustainable development of the business.
Reporter: With a closed ecosystem and a lot of experience in the capital market like SSI Securities, whether the destination of investment deals is IPO, listing instead of transferring large lots like many funds or show up?
Mr. Nguyen Duc Minh: The fund’s divestment strategy is also relatively flexible, in addition to selling when the IPO, the fund can divest when listed companies or divest to strategic investors, especially when the fund is good the fund combination has a large enough level of ownership.
Regardless of the form of divestment, we believe that with SSI’s capital market experience, businesses will be best prepared from financial transparency, corporate governance, home relations investment, as well as helping businesses set the expected value when publicizing.
The above activities help businesses to be ready and really bring the long-term effects of the business even after the fund has divested.
The PE investment fund contributes to creating investment opportunities when high-quality companies IPO and listed
Reporter: How do you evaluate the potential for PE investment in Vietnam? During this period, businesses face many challenges in capital, human resources, even the market due to COVID-19, is this a good time to negotiate deals?
Mr. Nguyen Duc Minh: In recent years, Vietnam’s PE market in general is attracting a lot of attention from foreign investors and is a good capital mobilization channel of private enterprises.
The contribution of PE funds will help the capital market develop healthier, facilitate capital mobilization for businesses as well as create investment opportunities when high-quality enterprises IPO and listed on stock market.
In the current period, businesses are facing many challenges in production and business activities, but there are also many investment opportunities for the fund and for the business itself.
Raising capital from another source instead of relying too much on credit capital in recent years. Especially in the current period when the bank’s disbursement is somewhat limited due to concerns about risks in translation.
Funding funds help businesses diversify their capital sources, access longer-term capital sources as well as seek to be accompanied by a partner in finance, management and even human resources in their development process.
Reporter: Finally, it is fair to say that VGIF is a new name, many previous funds have had a lot of experience in “hunting” and have had certain success when investing in PE. In your opinion, what makes the difference in the deals if VGIF is present?
Mr. Nguyen Duc Minh: The difference of VGIF is the combination of 3 leading institutions in Japan (DBJ), Thailand (CP group) and Vietnam (SSI). CP and DBJ are both big names in the international market.
CP Group is the largest private corporation in Thailand, and is one of the largest food manufacturers and distributors in the world with many years of experience in the agricultural / food / retail sector.
Meanwhile, DBJ is Japan Development Bank, under the Government of Japan with strong financial potential, global network and financial investment management capacity in many markets, especially in the region. ASEAN, China. SSI is the number 1 securities company in the country with a high reputation and a large customer network.
As an experienced local partner and extensive network from SSI, SSIAM will take on the role of deal sourcing and preparing initial assessments in the investment appraisal process.
The next appraisal process will be a coordination between the three parties, with a thorough assessment as well as bringing value to the investment after the investment is made.
The post-investment process will also differentiate the fund from the track record (portfolio) of active investments of SSIAM in the past with the accompanying participation and value creation of the investments in the portfolio.
With the leading experience in the capital market in Vietnam, the business will also be fully equipped to massify and continue its development process after the fund divestments.
The flexibility of the fund’s investment strategy is also a difference between the fund and some funds that merely make private equity in the market.
Thank you for the interview!
Source: vietnambiz.vn – Translated by fintel.vn