September 28, 06

NEWS / Foreign investment funds see high growth potential

HCM CITY ??” Viet Nam??™s rapid economic growth has lured more foreign indirect investment, with major management fund companies setting up offices in recent months.

Last Thursday, the Korea Investment Trust Management Company (KITMC), Korea??™s leader in the field, opened a representative office in HCM City.

Bumseok Kim, president of KITMC, said the company was the first Korean fund management firm in Viet Nam and has plans to raise US$70 million next month for an investment fund.

The company already has two funds in Viet Nam, the $26 million KITMC Vietnam Growth Fund founded in March and the $78 million KITMC Worldwide Vietnam Fund set up in June.

"We have so far invested around 30 per cent of these two funds," Kim told Viet Nam News, adding that within a year after each fund??™s founding, the rest of the money would be disbursed.

He did not provide portfolio details, only saying that the investments are in large-scale companies listed on the stock exchange as well as in equitised enterprises and companies in the over-the-counter (OTC) market that have potential for growth.

"We??™re considering investment in the real estate market and infrastructure projects," Kim added.

European funds

Earlier this month the Danish investment bank BankInvest received a license to open a representative office for an equity fund.

Hans Christian Jacobsen, a BankInvest executive, said he planned to open an office for the new fund, called Private Equity New Market, in HCM City in early November.

The fund, a newly established private equity fund with a capital of $80 million, has been set up to provide private companies in emerging markets with capital and know-how.

Viet Nam is a key market because of its strong economic growth and potential for private sector development, Jacobsen said.

The fund will target unlisted, well-managed local companies with a good potential for growth, either for exports or in the domestic market.

"We see financial institutions, agro-businesses, branded consumer goods, packaging materials and retail as interesting target sectors," he said.

He said 20 Vietnamese companies were being considered for investment and negotiations have already begun.

The size of investments will be between $500,000 and $15 million, he added.

Meanwhile, the Swiss-based fund Vietnam Holding with capital of more than $112 million has begun investment in Viet Nam, targeting industries like telecommunications, mining, petroleum and financial services.

Recently the multinational financial corporation Merrill Lynch also decided to participate in Viet Nam??™s stock market, obtaining a trading code through its custody bank, the Hong Kong and Shanghai Banking Corp. (HSBC). It has selected Vietnamese company Bao Viet Securities as its broker.

According to the Vietnam Securities Depository Centre, various investment institutions have also gained trading codes, including Old Mutual Clay Finlay Emerging Markets Fund and Epoch Global Equity Shareholder Yield Fund.

Key to growth

Truong Hung Long, deputy director of the Ministry of Finance??™s Financial and Banking Department, said at a recent seminar that foreign indirect investment was critical to Viet Nam??™s future growth.

The country targets annual economic growth at about 8 per cent from 2006 to 2010 and capital for investment in development at 40 per cent of the GDP, with foreign direct and indirect investment accounting for 35 per cent, and domestic sources, at 65 per cent. ??” VNS


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