There are clear signs of foreign portfolio investments returning to Vietnam, especially with the $35 million investment in a restaurant chain by Standard Chartered.
Standard Chartered Private Equity unexpectedly announced an investment deal worth $35 million in Golden Gate, a restaurant chain. Right after wrapping up the deal, the fund announced the plan to buy the An Giang Plant Protection JSC's (AGPP) shares.
Standard Chartered is a “rookie” in the field in Vietnam, and Golden Gate is its first investment affair in the country.
A report of Dragon Capital, an investment fund, showed that the value of the foreign portfolio investment in Vietnam by August 15 had reached $416 million, a significant increase from the $326 million worth of net purchase value of 2013.
Analysts commented that it is was now the right time for investors to pour money into Vietnam because macroeconomic conditions have improved compared to three years ago.
They believe that Mekong Capital, which has been in Vietnam since 2001, obtained huge profits from selling Golden Gate to Standard Chartered Private Equity.
Mekong Capital poured $2.6 million into Golden Gate in 2008, and then withdrew a part of the capital in 2010. It is estimated that the latest deal brought a high gross IRR (internal rate of return) of 45 percent.
The analysts noted that Standard Chartered appears to be developing a major investment plan in Vietnam.
It has announced a plan to buy 34.39 percent, or 22.4 million shares of AGPP. Analysts believe the price would be much higher than VND30,000 per share, the price level at which the company sold its shares to farmers last year. Thus, Standard Chartered has to spend no less than $32 million to acquire AGPP's shares.
According to Bloomberg, the fund is headquartered in Singapore, specializing in making investment in companies in their mid-development stage. The fund has reached many markets in China, India, South Korea, Southeast Asia, Africa and the Middle East.
The outstanding characteristic of the fund is that it mostly makes deals worth $25 million and higher. It reportedly has poured $6 billion into 100 companies operating in markets where Standard Chartered Bank is present.
Sean T. Ngo, managing director of Vietnam Franchises, a consultancy firm, commented that food and beverage (F&B) has become very attractive in the eyes of private equities.
“With Vietnam's increasingly high income and population, the deal is believed to bring big profits to Standard Chartered Private Equity, even though it has to spend a lot on it,” he said.
Golden Gate, established in 2005, is one of the largest restaurant chains in Vietnam, with 67 restaurants throughout the country bearing 11 different names, including Kichi Kichi, Vuvuzela, SumoBBQ, Isushi, Ba Con Cuu, Daruma and Gogi House.
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