VietNamNet Bridge – Doan Nguyen Duc, a well-known Vietnamese billionaire, the owner of the Hoang Anh Gia Lai Group, could have pocketed the profit of $152 million, or VND3 trillion, if he successfully have bought 20 percent of stakes at Arsenal football club.

Doan Nguyen Duc and coach Wenger of Arsenal FC.

The famous missed deal

In early 2008, a series of well-known newspapers in the UK reported that an Asian tycoon, the Vietnamese businessman Doan Nguyen Duc, attempted to buy 20 percent of stakes of Arsenal, worth $200 million.

Duc then also said on local newspapers that he had hired consultants to carry out due diligence over Arsenal’s books for consideration, if the deal was feasible.

The breaking news appeared on the British newspapers just two days after the Russian billionaire Alisher Usmanov increased his ownership ratio in Arsenal to 24 percent.

At that time, Duc was a great pride for Vietnamese, because this was, for the first time, a Vietnamese billionaire was ranked with the world’s billionaires.

Earlier this year, Sunday Times reported that Usmanov’s assets reached $18 billion.

However, Duc could not fulfill his dream. The Vietnamese watchdog agency rejected his proposal of “making outward investment,” saying that foreign currencies, the valuable assets, should be used for more valuable economic projects.

Failed to pocket VND3 trillion

Analysts believe that this would have been a great deal for Duc, if he successfully had bought the stakes.

Since February 17, 2008, Arsenal’s stakes have been increasing steadily, from 885,000 pounds per share to 1.56 million pounds, or 76.2 percent in total.

If Duc then had spent $200 million on the deal, he would have got back $362 million. And if calculating the sum of money in reference with the current exchange rate, the tycoon would have pocketed VND3.2 trillion.

However, some analysts have commented that the investment deal may be not so attractive as people think, if considering the other factors, such as the initial investment capital, the investment duration, the annual average yield or the exchange rate fluctuations.

It is true that the profit of VND3.2 trillion would be big enough to create a new tycoon in Vietnam. However, in order to do that, one would have to spend $200 million, or VND4.2 trillion in the initial investment capital, a huge sum of capital, which is equal to 2/3 of the total value of the stakes held by Duc in Hoang Anh Gia Lai Group.

Regarding the investment duration, the 76.2 percent of profit is really an impressive profitability level. However, the profit could be obtained after 5.5 years of making investment, from 2008 to 2013. This means that the investment deal in Arsenal, if it had been made, would have brought the 10.85 percent yield per annum only.

However, it’s undeniable that 10.85 percent is a good profit, if noting that the FTSE 100 index in the UK increased by 2.15 percent per annum only during the same time.

If Duc had bought Arsenal shares, he would have paid in pounds, the currency, which has depreciated by 22 percent against the US dollar, but has appreciated by 5 percent against the Vietnam dong. As such, the profitability of the deal would be different depending on the currencies on which the profit is counted.

If calculating the profit in Vietnam dong, the annual profit would be 12.8 percent, which is lower than the deposit interest rates. If calculating in US dollars, the profit would be 7.5 percent, which is “acceptable.”

Tri Thuc Tre