Investors make major inroads into Vietnam private equity scene

The Vietnamese market has been proving attractive to international private equity (PE) companies, reflected by the investment portfolio expansion of giants like KKR, Warburg Pincus and SK Group.

SK Group, South Korea’s second-largest conglomerate, has been investing heavily in Vietnam. It established Singapore-based SK Southeast Asia Investment Corp. in 2018 and has invested in promising Vietnamese companies, including the purchase of a 9.5% stake for $470 million in Masan Group, a leading Vietnamese multi-business corporation, and $1 billion in Vingroup, the country’s largest private conglomerate. The two transactions were announced in 2021.

SK Group chairman Chey Tae-won, Samsung Electronics chairman Lee Jae-yong, LG Group chairman Koo Kwang-mo, and Hyundai Motor Group executive chair Chung Euisun joined a 205-strong business mission led by President Yoon Suk Yeol’s state visit to Vietnam from June 22-24 to further boost bilateral economic ties.

SK Group, Korea Gas Corporation (KOGAS) and Vietnamese conglomerate T&T Group signed a memorandum of understanding on June 23 to cooperate on developing LNG and hydrogen projects in Vietnam, which is seeking to reach carbon neutrality by 2050 via a clean energy transition.

In May, Vietnamese Vice President Vo Thi Anh Xuan paid a working visit to the United Arab Emirates to grow investment and trade opportunities.

The UAE Minister of Economy, Abdullah bin Touq Al Marri, held a meeting with Xuan on May 5 to discuss strengthening the economic partnership between the wealthy nation and Vietnam by boosting trade and investment.

The two sides discussed enhancing opportunities for cooperation and talks at the private-sector level and increasing the UAE’s investments in the Vietnamese market in new economic sectors. This promises more PE investments from the Middle East country in Vietnam.

Currently, the UAE’s investments in Vietnam amount to AED260 million ($71 million), and several UAE companies such as DP World, Emirates Investments Group, Mubadala, and Borouge have invested in Vietnam, the UAE Minister of Economy said in a statement the same day.

Also in May, Chris Freund, founder and partner of Vietnam-focused private equity firm Mekong Capital, told Reuters that it is looking to build a climate fund worth up to $200 million as early as next year, focusing on investments that will help with the regeneration of forests in the Mekong region.

The HCMC-based firm is setting up a team for the fund, which will look at businesses that will help restore forests including those involved in organic and seaweed farming in the Mekong region, which includes Laos, Cambodia, Thailand and Vietnam, Freund said.

“There are actually a lot of businesses like that that are doing those things in this region," Freund said in an interview with Reuters. "But there's really no fund investing in those."

The climate fund is set to be the first to focus specifically on Southeast Asia with the launch coming at a time when investors globally are increasingly focusing on investments that can help in the fight against global warming.

On May 19, 2023, Vietnam’s EQuest Education Group announced its successful raising of $120 million through a combination of debt from creditors and equity from KKR, a global private equity giant that had already invested $100 million in EQuest.

The U.S. heavyweight announced its first investment of $100 million in EQuest in May 2021. Together with that equity investment, Annabelle Vultee joined the Vietnamese firm’s board of directors at the time. Prior to that, she had been the China chief operating officer of EF Education First.

EQuest said the latest proceeds will be utilized for the investment in the Canadian International School System in Ho Chi Minh City, to expand its college and university operations, particularly Broward College Vietnam campuses in Hanoi, Hue, and HCMC.

In March 2023, VinaCapital, the leading domestic asset manager in Vietnam with a diversified portfolio of nearly $4 billion in assets under management, and Japanese conglomerate Ryobi signed a deal to form a business alliance to jointly explore real estate and other investment opportunities in Vietnam.

The duo will look at suitable real estate projects and opportunities in listed and private equity, venture capital, infrastructure, and energy. The VinaCapital-Ryobi strategic partnership was established thanks to the engagement of Aozora Bank’s Japan Desk in Vietnam.

Toshiyuki Matsuda, group president of Ryobi, said his corporation and VinaCapital first worked together about 10 years ago on an equity investment “that did very well”.

In January 2023, Vietnam-based PE firm ABB said it is seeking to raise $100 million for its second fund in this year’s second half.

ABB, which is associated with investment banking company Asia Business Builders, launched its first $20 million PE fund in 2018, which is now fully invested. The second vehicle will continue to back growing Vietnamese small- and medium-sized enterprises (SMEs) that are already making money or substantial revenue.

Asia Business Builders is a Vietnam-focused merchant bank boutique that manages a growth private equity fund through Singapore-based ABBPE Capital Management Pte. Ltd. and provides strategic M&A advice through its parent company ABB Merchant Banking JSC.

World Bank Group investment arm IFC is considering a proposed investment of $10 million in this second fund, called ABB II, an IFC disclosure on July 11 showed.

In December 2022, Sapien Group, an Australia-based financial services group, launched its Vietnam chapter with a strategy to invest at least A$100 million ($67.8 million) in Vietnam annually.

The Vietnamese unit seeks to aid SMEs to boost production, job creation, and incomes. Sapien Ventures, under Sapien Group, focuses its investments in startups related to fintech, blockchain, artificial intelligence (AI), and big data. Sapien Capital Partner, another unit under the same roof, will invest in education, high-tech agriculture, and renewable energy.

World-leading private equity firm Warburg Pincus led a $250 million investment in property developer Novaland, one of Vietnam’s largest listed companies, in May 2022. The deal marked the New York-based giant’s first investment in Novaland, kicking off their strategic partnership.