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VietNamNet Bridge – Fast growing enterprises, especially the ones in FAST
500, the list of the 500 enterprises with fastest growth rates in Vietnam, have
big advantages to attract the capital flow from investment funds.
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This was the second consecutive year the event was organized to honor the businesses which obtained biggest achievements.
The enterprises in 2011’s FAST 500 obtained impressively high growth rate of 57 percent on average, higher than the 54 percent growth rate in the previous report. Especially, the percentage of private enterprises in the list is much higher than state owned ones (71.6 percent vs. 22.2 percent).
Andy Ho, Managing Director of VinaCapital, said on Dau tu newspaper that the fund is much interested in FAST 500 enterprises and ready to provide financial support to them.
VinaCapital VOF reserves 50-100 million dollars to inject into small enterprises which have high growth potentials in the fields of food and foodstuff, education and agriculture.
The enterprises with high growth rates have caught the special attention from investment funds, which are seeking the businesses with great potentials to invest in. The FAST 500 enterprises, which obtain high growth rates despite the high interest rates and high inflation, are clearly the good choices for investors.
It’s clear that the enterprises which have the growth rates higher than that of other enterprises in the same business fields, or have the operation scale bigger than the average scale in the same fields promise to bring higher profits to investors.
Believing that fast growing businesses would create new investment opportunities, but Nguyen Hong Truong, a senior executive of IDG Ventures Vietnam (IDGVV) declined to say about the volume of capital to be disbursed and the number of enterprises IDGVV would invest in this year.
He said that the decisions would be made after considering the economic growth, the market performance and businesses’ quality. However, he said IDGVV targets fast growing enterprises in the fields of technology, media and consumer goods.
However, analysts say, the high growth rate of enterprises would not be the only factor investment funds consider when making investment. They would choose the businesses which have reasonable business strategies and can show the inner strength.
Analysts say that 90 percent of Vietnamese enterprises obtaining high growth rates have been relying on the capital investment. Meanwhile, the productivity of Vietnamese enterprises, including the ones with fast growth thanks to the market expansion and strong sales strategies, remains modest.
Especially, Vietnamese enterprises do not spend much money on research and development, which shows the lack of a long term vision of businessmen. Even if enterprises make investment in research and development, the possibility of converting the research into productivity remains unclear.
Therefore, the analysts say, investment funds have their own reasons to worry about the fast, but unsustainable growth of Vietnamese enterprises.
VinaCapital always considers the available resources of enterprises, including experience, products and financial resources, the potentials of the production fields, the suitability of enterprises’ products to the society’s development, and the conditions for development, including the targets and advantages of enterprises.
As for Vietnamese enterprises, due to their weakness in competitive edges and the resources to retain talented officers, when considering investment possibility, VinaCapial would also consider some more factors, such as the financial resources, high ranking managers, branding experience and the distribution system.
In related news, a report by LCF Rothschild released on April 3 showed that 17 foreign investment funds in the Vietnamese stock market have the NAV growth rate of 16.2 percent on average. Meanwhile, VN Index increased by 26.6 percent in the first quarter of 2012.
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