70 foreign funds entering Vietnam, following one another

Investors whisper in each other’s ears that investment funds earned super profit in Vietnam last year. Two funds gave investors the profit of 140%, which meant they received 1.4bil for 1bil they invested. Another fund, which injected money in real estate, did not gain such a fat profit, but the profit proved to be also very encouraging, at 60%, which meant investors received $0.6 for every $1 of investment.

The fat profit Vietnam can bring to investors has encouraged them to come to Vietnam. The figure released at a workshop late last week may shock everyone: 70 foreign investment funds are waiting to join the market.

There is no exact figure about portfolio investment in Vietnam, as the OTC market is out of the State’s control. However, it is clear that the three biggest investment funds on the market now hold nearly $4bil. Dragon Capital is managing some $1.5bil, VinaCapital $1.3bil and Indochina Capital $1bil. VinaCapital has wrapped up a visit to the world’s financial centres to raise $250-300mil.

A series of domestic based funds have also been set up recently. The Phu Lan Fund Management Company has set up a new fund, called Lion Capital. Louis Nguyen, Phu Lan director, said that the company was planning to raise $200mil of funds from domestic and foreign investors in America, Asia and Europe, which will be injected in 10 projects.

The beyond-expectation growth of the three funds has promoted other investment funds to join Vietnam’s market. Mekong Capital has wrapped up the raising of $100mil for its third fund, called Azalea Fund. Mekong’s first fund had only $18.5mil in capital, while the second had $50mil, and the third is two times bigger than the second one.

In the last few years, an investment deal of Mekong Capital was just valued at several hundred thousands dollars, but now the fund has to inject 5-6mil in every deal. The fast developing stock market has made the value of private enterprises skyrocket, and Mekong Capital has to pay high to be eligible to become a strategic shareholder in local companies.

After Azalea Fund, a series of funds are waiting for operation licences from the State Securities Commission. These include one Japanese owned fund, estimated to have $200mil in capital. Chinese and Hong Kong financial institutions have landed in Vietnam, setting up financial consultation firms.

Investment funds are all getting ready for the auctions of big companies’ shares to be held with their equitisation in the coming time. It is expected that some $2bil more will be injected in Vietnam in 2007.

Listing shares No 1, real estate No 2

Director of a fund management company said that most investment funds were making investment in shares of listing companies and OTC shares. Meanwhile, injecting money in the real estate sector proves to be the second choice of investment funds, though this is a long-term investment.

BankInvest, which only injects money in private enterprises, has announced investment in two initial projects, AAA insurance and Duc Thanh Wood Processing Company.

Having been present in Vietnam for a long time, Mekong Capital has invested in 12 companies, including big names like Tan Dai Hung plastics, Ngo Han electromagnetic wire, Minh Hoang garment, Saigon Gas, Lac Viet IT. Especially, Ngo Han two times has received investment, once in April 2005 ($1.85mil), and once in January 2007 ($1.91mil).