VinaCapital set to deploy $200m in SE Asia

The Ho Chi Minh City-headquartered asset management firm is looking at $200 million worth of deals in the region in the next six months, says chief investment officer Andy Ho.

Vietnam-based asset manager VinaCapital has about $200 million to deploy into new investments in South-East Asia through June of this year.

Chief investment officer Andy Ho told Private Equity International that the firm has a strong deal pipeline but also acknowledges that it does take effort and roughly three to six months to close on these deals.

“Our closure rate is typically around 20 to 25 percent. As we know closing the deal is most challenging, due diligence results may not come in, terms in the investment may not be agreed, and market conditions change, among others.

Areas of interest include consumer-related sectors as well as state-run businesses.

VinaCapital, with $1.3 billion under management, runs three closed-end funds trading on the AIM Market of the London Stock Exchange – the VinaCapital Vietnam Opportunity Fund (VOF) Limited, which invests in listed and private equity, real estate and bonds; real estate fund VinaLand Limited; and infrastructure-focused Vietnam Infrastructure Limited. The firm also co-manages the $32 million DFJ VinaCapital technology venture capital fund with Draper Fisher Jurvetson.

The VOF primarily invests in expansion capital and buyouts of Vietnam-based companies or businesses with at least 75 percent of their assets and operations derived from Vietnam at the time of investment.

As of 31 October 2016 the VOF has made investments in dairy company Vinamilk, steel manufacturer Hoa Phat Group, and premium hotel company Sofitel Legend Metropole Hotel Hanoi, VinaCapital said on its website.

“We are excited about the fact that Vietnam’s GDP continues to grow at 6 percent per annum, the dong has been very stable relative to the US dollar and also strengthened against the other currencies in South-East Asia. We are also excited about the valuations in Vietnam that are still at around a 25 to 35 percent discount on a private equity basis, compared with other countries in South-East Asia.”

In November last year VinaCapital teamed up with Warburg Pincus to create a hospitality platform in South-East Asia, that will consist of the development, acquisition and management of hospitality assets across the region. The hotel investment platform will be seeded with up to $300 million from Warburg and VinaCapital, with assets including Serenity Holding and select resort and city hotels in Vietnam.

Ho added good opportunities are plentiful in South-East Asia in the next three to five years.

“There’s the Philippines where the population is large and there are a lot of opportunities although valuations are a bit high. Indonesia’s got an election in the first quarter of 2017, once that’s over, I think the economy will stabilise and there will be a lot of opportunities to invest there. In addition, as commodities recover and oil prices rise above $50 a barrel, Indonesia will benefit quite nicely from its natural resources assets. We’re also waiting to see what happens in Thailand, as a new king has come on board and perhaps a new prime minister will be elected and a new government in place.”

Meanwhile for Malaysia, Ho said political uncertainty has been a big burden on the economy, and in Myanmar the legal infrastructure still needs to be developed.