Vietnam pulls in record PE investment

Global PE firms are warming to Vietnam, and they account for the bulk of the record $535 million plowed into the country in the first half of 2013.

Private equity investment in Vietnam hit $535 million in the first half of 2013, a record first half amount that already exceeds the full year totals for the last four years, according to data from PEI and Dealogic.

To June 30, two outsized deals accounted for the bulk of the investment: a $200 top-up investment in Masan Consumer from Kohlberg Kravis Roberts and a $200 million buyout of real estate group Vincom Retail by a Warburg Pincus-led group.

In addition, Navis Capital bought a 49 percent stake in Godaco, a seafood processor, for $26.5 million. 

In May, a unit of CDH Investments, together with other investors, in total paid $110 million for a 20 percent stake in Mobile World, Vietnam's largest mobile phone retailer. The investors bought the shares from Mekong Capital. The deal reportedly represented an 11x exit for Mekong.

Private equity is inquiring about more sophisticated deal structuring 

Dao Nguyen, managing partner for Vietnam at Allen & Overy

The peak year for Vietnam investments was in 2007, when private equity invested $750 million, according to a report by Grant Thornton. 

The second half of 2013 seems on track to exceed that amount. In July, TPG Growth, TPG’s global growth fund, acquired a 49 percent stake in Hoa Muoi Gio, an agricultural business that is a subsidiary of Masan Consumer, for about $50 million, according to TPG officials. 

Southeast Asia’s potential is drawing investors, who see it as an attractive alternative to China and India, according to a recent Bain & Co report. “[G]eneral partners have failed recently to generate expected returns amid struggles to both close new deals and find exits [in China and India].”

“Hoping to keep their allocations to Asia consistent, frustrated investors have shifted their interest southward,” the report said.

In addition, private equity is inquiring about more sophisticated deal structuring, said Dao Nguyen, managing partner for Vietnam at Allen & Overy in Ho Chi Minh City. 

“They are looking at LBOs and structures never considered in Vietnam before.”

Vietnam PE investment set for record year

  2013*    2012    2011   2010
 Value  $535  $262   $184   $45
 Volume  4  10   5   11

Source: PEI and Dealogic