Warburg Pincus has recently reached a deal to invest about $370 million in Techcombank, marking the largest private equity deal in Vietnam so far.
Techcombank also selected Vesta VN Investments B.V. and COG Investments B.V from Amsterdam, Netherland where the largest private equity fund in Vietnam Warburg Pincus is headquartered to sell treasury shares with the foreign ownership limit of 8.54 per cent of its charter capital.
After acquiring HSBC's shares last year, Techcombank is now holding 172.3 million treasury shares. The bank plans to sell ̣93.2 million treasury shares to investors, equivalent to approximately 9.39% of the bank's shares.
“It’s a market that we think there’s a lot of opportunity in,” Jeffrey Perlman, Southeast Asia chief for Warburg, told Reuters in an interview last week. “Four, five years ago, even in Vietnam there wasn’t an understanding of what was private equity and what it will do to businesses.”
Emerging as an alluring manufacturing destination in place of China has helped Vietnam achieve an impressive 6.8 per cent growth last year, thereby enlarging the middle class of the 93 million people market.
After booming nearly 50% last year, the VN-Index has grown by 20% this year, the best growth recorded among Southeast Asia countries.
Perlman said that the growth in Vietnam’s capital markets to $200 billion in value from some $35 billion five years ago, was a big draw for global investors, and he expected local regulators to bring in more reforms to develop the market.
Warburg's first investment deal so far in Southeast Asia was a $370 million deal in Vincom Retail, a real estate unit of Vingroup. After the transaction, Warburg Pincus still holds five per cent stake in Vincom Retail with 93 million shares.
“You have two-thirds of the population who don’t have a bank account. More than 90 percent don’t have access to credit cards. There is a huge runway in front,” Perlman said.
With a $1 billion investment commitment, Warburg Pincus is currently the largest private equity fund in Vietnam. Other competitors are KKR & Co. and TPG who also pour a huge amount of money into the market. Prior to the deal with Techcombank, the fund's portfolio in Vietnam included Vincom Retail's transaction, a $200 million joint venture with Becamex and another joint deal with VinaCapital worth at least $ 300 million.
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