Despite the slow growth of the world’s economy and the more attractive US dollar interest rate, the capital flow to private equity (PE) in South East Asia is still high, at $5.5 billion in 2015, according to EY, a finance consultancy firm.
Singapore leads the regional PE market, followed by Indonesia, the Philippines, Malaysia and Vietnam.
In Vietnam, the capital flow to PE (mostly middle-size affairs) was estimated at $304 million in 2015. However, analysts said the actual figure could be even higher, because the information about small deals was not released.The hottest business fields include telecom & technology, car, retail, consumer goods and some other industries.
EY believes that the capital flow to PE in South East Asia will be big this year because investment funds now have abundant money. Twenty four funds were reported as finishing the fund raising last year, a two-fold increase compared to the year before. The total money the funds have raised may reach $16 billion, or 45 percent higher than the year before.
In Vietnam, Mekong Capital has raised more than a half of the expected figure of $150 million for MEF III. It plans to make disbursement for 1-2 investment deals this year, targeting the retail, restaurant and customer service sector.
Chris Freund, CEO of Mekong Capital, told Nhip Cau Dau Tu’s reporters that it had a list of many potential companies for MEF III to consider and make investment.
Most recently, the private investment fund of Standard Chartered, together with Goldman Sachs, has invested $28 million into M_Service with MoMo money remittance service.
Meanwhile, VOF (Vietnam Opportunity Fund) managed by VinaCapital, after investing $45 million into the dairy producer IDP, has decided to inject money into the healthcare sector in an investment deal worth $10 million in Thai Hoa Hospital in Dong Thap province.
Sources said that VOF is near completion of a major deal in a building material company worth tens of millions of dollars.
EY said that 60 percent of surveyed investors said they were considering four or more merger & acquisition (M&A) deals, while 54 percent hoped they would complete 2-3 deals in the next 12 months.
Jean Christophe Marti, director of Navis Capital Partners Fund, noted that Indonesia and Vietnam are the two promising investment addresses this year.
EY recognized a disinvestment deal made by a PE fund in Vietnam, but it did not specify the name. However, sources said this might be KKR fund’s sale of Masan Consumer stakes.
In general, the number of disinvestment cases was modest in the last two years, just one or two cases each year.
Photo: CBR Investment AG