Category: Dynasty News, Vietnam News
Equitization to create opportunities for investors
VietNewsOnline
Foreign investors will find many opportunities in Vietnam as the government pursues its equitization agenda over the next few years, an investment conference in Ho Chi Minh City was told.
Up to 90 percent of more than 332,500 small and medium sized unlisted Vietnamese companies are in need of a capital injection to realize their mid-and-long term plans, according to a report given at the “Alternative Investment Vietnam 2009” conference in Ho Chi Minh City on Tuesday and Wednesday of last week.
But the conference heard since late 2008, only a few Vietnamese companies had managed to attract the funds to finance their expansions.
There were many Vietnamese companies with a market capitalization of between US$10 million and $30 million that wanted to increase their market capitalization to $100 million, according to Bradley Lalonde, general director of BIDV-Vietnam Partners, a Bank for Investment and Development of Vietnam joint-venture investment vehicle.
With the extra cash, these companies were likely to record double-digit growth despite the global economic downturn, Lalonde said.
Fund management companies were now eying unlisted companies in Vietnam’s banking, finance, infrastructure and consumer goods manufacturing sectors, he said.
Vietnam was in a better position than neighboring countries to attract foreign investment, having been less affected by the global financial crisis because of the government’s good economic management, Lalonde told the investment conference.
This year, Vietnam is expected to post economic growth of between 4.5 and 5.5 percent cent, according to forecasts by the Vietnamese government, the World Bank and the Asian Development Bank. In comparison, the World Bank has forecast global economic growth to contract by 1.7 percent this year.
But despite expectations Vietnam’s economy will continue to grow, it still needs foreign investment, particularly in key areas.
“Vietnam is in need of billions of dollars to develop its infrastructure and it has started opening the doors to the private sector,” Lalonde said.
Vietnam needs at least $500 billion to implement road projects, $100 billion for railway projects and $100 billion for water supply and waste treatment systems, said Nguyen Mai Bao Tram, HCMC Infrastructure Investment Joint Stock Company’s director of investment and business.
Anpha Investment Company Chief Executive Bui Cong Giang said foreign investors would find investment opportunities as the government equitized state-owned enterprises.
Equitization is the process of government-owned companies listing on the stock exchange as partially privatized entities, with the government often owning a majority stake.
Giang said foreign investment funds were already starting to return to Vietnam after an absence. “At least three investment funds are meeting with us in the next few days to discuss working with us,” he said. “It is a good sign.”
However, Prudential Vietnam Fund Management Investment Director Craig Martin warned investment funds will be more focused in their investments in future with smaller amounts invested.
Olivier Do Ngoc, Managing Partner of Dynasty Investments Company, predicted Vietnam’s health and education sectors would attract significant capital flows over the next two to three years.
Asian Development Bank’s Country Director Ayumi Konishi said foreign investors were more confident about investment in Vietnam since Prime Minister Nguyen Tan Dung told a global investment conference in Hong Kong last month that his government was determined to press ahead with economic reforms and the equitization of state-owned firms.
According to a March survey by consulting firm Grant Thornton Vietnam, 67 percent of 169 domestic and foreign businesses with private equity investments in Vietnam said they considered Vietnam a more attractive investment destination than any other country.