Vietnamese private equity is having a moment.

PE firms completed 38 deals in Vietnam last year, a 41 percent increase from 2017 and a peak for this decade, according to the Global M&A Review 2018 from business information publisher Bureau Van Dijk. Spending more than tripled to $1.6 billion, second only to Singapore at $7 billion and on a par with Indonesia at $1.7 billion in South-East Asia.

There are a number of factors driving this growth, including a government push to privatise state-owned enterprises, improved corporate governance and a greater number of large companies suitable for private equity investment, Huong Trinh, a Vietnam-based director at advisory firm BDA Partners, told Private Equity International.

Here’s a brief introduction to the country’s private equity market:


Vietnamese private equity boasts only a handful of domestic players. These accounted for just 36 percent of the country’s private equity deals in 2018, according to Grant Thornton’s Private Equity in Vietnam report in May.

Ho Chi Minh-based Mekong Capital is among the oldest and has raised four growth equity vehicles since 2001, the most recent being its $112 million 2015-vintage Mekong Enterprise Fund III. The firm is expected to return to market in H2 2019 with a successor to MEF III, which was 97 percent invested as of early July.

Notable players also include fellow minority investor Vietnam Investments Group, whose $252 million 2015-vintage Fund III is the largest corporate private equity vehicle ever raised by a Vietnam-headquartered firm, and PENM Partners, a Danish private equity firm that invests solely in Vietnam’s mid-market.

Vietnam is on the radar of pan-Asian funds. Warburg Pincus, which owns five Vietnamese companies, completed the country’s largest ever private equity deal last year, investing over $370 million in Techcombank. The firm provided $100 million in a Series C funding round for mobile payments company Momo in January.

London’s CVC Capital Partners, New York’s KKR and Tokyo’s Advantage Partners have also invested in Vietnam through pan-Asian funds within the past five years. Four of the country’s 10 largest private equity deals this decade have occurred in the past two years, according to S&P Global Market Intelligence.

“Over the past five years we’ve seen many more auctions,” Trinh said. “It’s easy to see a single asset with 10 or more interested players.”

What and where?

Investors are most bullish on growth equity, with 75 percent expecting the strategy to grow in 2019, followed by venture capital at 69 percent and buyouts at 67 percent, per Grant Thornton. The report attributed the demand for growth equity to a large number of fast-growing profitable companies with a need for capital. However, it does not specify whether the increase refers to the number of deals or volume of capital raised.

Start-up investments accounted for 71 percent of all Vietnamese transactions last year, up 56 percent from 2017.

Technology is among Vietnam’s hottest sectors, accounting for 40 percent of all private equity transactions in 2018. Investors identified fintech as the most attractive sector over the next 12 months due to government plans to build a cashless society by 2020, with education and renewable energy the next most appealing.

Vietnam’s economy also received an 8 percent boost from Q1 2018 to the first quarter of this year following a shift in production from China due to the US-Sino trade war, according to Japanese investment bank Nomura.

Foreign direct investment reached a four-year high of $16.74 billion in the first five months of the year, 72 percent of which targeted manufacturing and processing, Vietnam’s Foreign Investment Agency said.

The trend could be short-lived after US president Donald Trump hinted at potential future tariffs on Vietnam in late June.


Investing in a frontier market is not for the faint-hearted and return expectations reflect the additional risk. Almost two-thirds (65 percent) of private equity investors require a 20 percent to 30 percent net internal rate of return on exit from Vietnam, compared with 11.5 percent for Asia-Pacific markets as a whole, per Grant Thornton.

Vietnam delivers: 69 percent of respondents said their private equity portfolios could meet expectations over the next 12 months relative to their benchmarks, while a further 29 percent believed they could exceed expectations.

Mekong’s $50 million Mekong Enterprise Fund II has delivered a 4.6x net return multiple and 22.7 percent, according to its website. The firm’s $3.5 million investment in the now-listed MobileWorld in 2007 delivered a 61.1 percent gross IRR and 57x return multiple over a 10.5-year holding period, during which it gradually sold blocks of shares.

Listing is an appealing exit route. Vietnam overtook Singapore as South-East Asia’s top-grossing market for IPOs last year, creating $2.5 billion of proceeds over five listings, according to EY.

“The ideal exit is a full trade sale to a strategic buyer, but […] it’s very easy to list in Vietnam,” Mekong founder Chris Freund told PEI.