UOB Venture Management (UOBVM), a wholly-owned subsidiary of Singapore's United Overseas Bank Limited (UOB), and Japan’s ORIX Corporation have announced they will each invest $25 million in the Bitexco Power Corporation, one of the largest private hydropower companies in Vietnam.

Terms were not disclosed by Bitexco but according to Nikkei Asia the joint stake is just over 10 per cent in newly-issued shares in a deal to be completed in mid-September.

“The acquisition by globally-renowned institutions, UOB and ORIX, will help enable Bitexco Power to continue its rapid growth in the increasingly dynamic Vietnamese renewable energy space,” said Mr. Ian Fox, CEO of Bitexco Power.

According to Mr. Seah Kian Wee, Managing Director of UOBVM, “hydropower is one of the most cost-efficient sources of electricity generation and we believe Vietnam’s growth will continue to drive the demand for renewable energy.” 

By investing in Bitexco Power, “we hope to participate in the growth of the power sector and play a role in the country’s economic transformation,” he said.

This also marks the first investment by the Japanese financial services group in Vietnam’s hydropower sector. 

“We believe Bitexco Power is in the best position to benefit from the country’s ongoing reform of the electricity market, underpinned by the rising demand for electricity,” said Mr. Yuichi Nishigori, Corporate Executive Vice President of ORIX.

Vietnam’s rapid growth of around 6.5 per cent in recent years has seen power consumption increase dramatically and the government has liberalized the power sector and introduced market pricing to attract private investment, the companies said in a joint press release.

The General Statistics Office estimates that electricity demand will continue to expand by between 10 and 12 per cent annually, rising from 169.8 terrawatt-hours (TWh) in 2015 to 615.2 TWh by 2030.

Following this investment in Bitexco, ORIX will cooperate further with partners in expanding its business in the renewable energy sector not only in Vietnam but also across Asia.

Vietnam’s power sector was earlier this year predicted to drive FDI into the country, with forecasts that investment will potentially hit $4.5 billion in 2016 after having reached $2.8 billion in 2015. 

The sector has become appealing to a range of international financial institutions, according to the International Finance Corporation, the private sector lending arm of the World Bank Group.

Bitexco owns and operates 18 hydropower plants in Vietnam that can generate about 3,500 gigawatt-hours (GWh) of renewable energy annually, which is enough to provide electricity for about 2.7 million people in the country. 

It plans to use the new capital for business expansion purposes and consolidate its market leadership position within the renewable energy sector.

UOB is a leading bank in Asia with a global network of over 500 branches located in 19 countries and territories. 

UOBVM is a Singapore-based private equity fund managing about S$1 billion ($735 million) in assets. The investment in Bitexco Power will be allocated from its ASEAN China Investment Fund III.

ORIX Corporation is also a financial group, providing products and innovative services for customers by continually pursuing new business fields. 

Founded in 1964, it has operated in various sectors, including lending, investment, life insurance, banking, asset management, and activities relating to energy and the environment.

VN Economic Times