Warburg seals biggest PE deal in Vietnam

The firm’s over $370m investment in Techcombank came from two of its global funds, the Warburg Pincus Private Equity XII and the Financial Sector Fund.

Warburg Pincus has invested over $370 million in Vietnam’s largest commercial bank Vietnam Technological and Commercial Joint Stock Bank (Techcombank) this week, making it the largest private equity deal in the country’s history.

It is understood the buyout firm will evenly split the investment from two vehicles, the 2017-vintage $2.3 billion Warburg Pincus Financial Sector Fund and its $13.4 billion global fund Warburg Pincus Private Equity XII that closed in late 2015.

This is the firm’s fourth investment in Vietnam as it continues to make big bets in one of the fastest growing economies in South-East Asia. Including the Techcombank deal, Warburg has invested over $1 billion in Vietnam to date.

Warburg teamed up last month with the Vietnamese real estate and infrastructure developer Becamex IDC Corp to form a joint venture focused on institutional-grade industrial and logistics properties across the country. It also has an existing $300 million hotel JV with the domestic private equity firm VinaCapital. And in October it sold close to 22 percent of its stake in shopping mall operator Vincom Retail via an initial public offering on the Ho Chi Minh Stock Exchange. The deal had a total value of over $740 million, garnering a return of between 3x and 4x for Warburg’s investors, as previously reported by Private Equity International.

Vietnam’s banking penetration rate remains low at under 30 percent, compared with other countries in the South-East Asian region. With the investment Warburg plans to consolidate its position in Vietnam and become a leading retail bank in the region, Jeffrey Perlman, managing director and head of South-East Asia, said in a statement.

It is understood the bank also has plans to list on Ho Chi Minh City stock exchange later this year.

Financial services is one of the key focus sectors for Warburg Pincus. Its portfolio in Asia includes specialty finance companies such as Kotak Mahindra Bank and AU Small Finance Bank as well as China Huarong, Hwabao WP Fund (formerly Fortune SG), Cango and Wacai in China.