Techcombank is currently one of the largest private sector joint stock commercial banks in Vietnam and one of the most profitable banks in Asia while Warburg Pincus is a leading global private equity firm focused on growth investing.
The investment is a part of Techcombank’s equity raising effort to provide growth capital to fund Techcombank’s expansion and enable Techcombank to further solidify its leading position in Vietnam. As the pre-eminent private equity investor in Vietnam, this transaction represents the largest ever private equity investment in Vietnam to date and brings Warburg Pincus’ total commitment in the country to over US$1 billion.
A consumption-driven economy with a large and growing middle and upper-income population, Vietnam ranks as one of the fastest-growing economies in Southeast Asia with a GDP growth rate of approximately six per cent in the past decade. The country benefits from a formidable young and dynamic workforce with over 60 per cent of its nearly 100 million population under the age of 40 in 2017, according to World Bank figures.
Foreign direct and indirect investments in Vietnam is on a sharp rise and hit yet another record high in 2017 of US$36 billion, which represents over a 40 per cent increase from the previous year. In 2017, Vietnam also had a trade surplus of US$2.7 billion buoyed by both high exports as well as reduced imports from increased local manufacturing.
“The Vietnamese economy and the banking sector are experiencing tremendous growth right now. Techcombank is in an excellent position to serve this demand, and we look forward to working with Warburg Pincus to further consolidate and build upon our current financial strength,” said Ho Hung Anh, Chairman of Techcombank.
“The Vietnamese market is at an inflection point. We are delighted to welcome Warburg Pincus as our partner and we look forward to working with them to pursue new high growth opportunities and further our aim to be the leading bank in the region within the next decade,” said Nguyen Le Quoc Anh, CEO of Techcombank.
Vietnam’s banking penetration rate remains very low, at just over 30 per cent according to 2017 figures, compared to 56 per cent in Indonesia, 71 per cent in Thailand and 77 per cent in Malaysia, which provides a strong headroom for growth.
While nascent, the Vietnamese consumer lending sector is rapidly emerging and total consumer outstanding loans has tripled between 2013 to 2016 as the newly minted affluent and mass affluent class actively seek products such as mortgages, auto loans and credit cards.
Saurabh Agarwal, Managing Director of Warburg Pincus, commented that the Vietnamese banking sector was highly under-penetrated with strong potential for outsized growth.
“With a strong balance sheet and superior service offerings, Techcombank is well positioned to capitalize on this opportunity and gain a larger share of the market. We look forward to leveraging our deep expertise in the financial services sector to support the bank’s long-term growth,” said Saurabh Agarwal.