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Investment funds pour money into private equity

VietNamNet Bridge - Private equity is an attractive investment in investors’ portfolio, but in many cases, investors may feel disappointed about the profits.
VietNamNet Bridge - Private equity is an attractive investment in investors’ portfolio, but in many cases, investors may feel disappointed about the profits.

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VinaCapital, at a meeting held after the Vietnam Opportunity Fund (VOF), one of three investment funds under its management, moved the AIM (Alternative Investment Market) to the Main Market at the London stock market, said that private equity would continue to be an important investment.

Investments in private equity have brought $23 million in gross profit to VOF. In the last five years, it had annual profitability rate of 22.6 percent on average.

VOF also said that the value of every investment item in private equity in the time to come would be between $10 and $40 million, while it would focus on the enterprises in food & beverage, healthcare and real estate.

To date, VOF has invested more than $1 billion in the Vietnamese stock market and domestic businesses. If considering the investment portfolio, private equity (of private companies, unlisted) ranks third, after listed shares and real estate, which accounts for 12.3 percent of the net asset value.

Of the VOF’s five most noteworthy investment items, two are in private equity, including the Thai Hoa Hospital (healthcare sector) and Novaland Group (real estate).

According to Dang Pham Minh Loan, deputy managing director of VinaCapital VOF, following success with Hoan My Hospital (the IRR – internal return rate – of 48 percent), VOF plans to inject capital in more hospitals.

Private equity is an attractive investment in investors’ portfolio, but in many cases, investors may feel disappointed about the profits.
Private equity proves to be a delicious piece of cake not only to VOF, but to other investors as well. 

A survey on private investments conducted by Grant Thornton Vietnam released in March 2016 showed that there are three rivals in private business merger & acquisition (M&A) deals – domestic private investment funds, foreign private investment funds and investors from different business fields.

The rivalry has helped enlarge the market. The Grant Thornton 2011 report showed that in 2003-2011, investment funds poured $1.8 billion into private equity, especially family run businesses.

However, analysts noted that the figure remains modest compared with investments made by PE funds in ASEAN markets at the same time, about $11.7 billion.

The analysts believe that the figure might have been double as new players’ have appeared. 

These include newly set up funds or operational funds which want to expand their investment scale, such as Templeton Emerging Markets Group. It has invested $15 million into Huy Viet Nam, which runs three food chains.

Meanwhile, SAM has acquired 15 percent of My Chau JSC which owns My Chau drug store chain.


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