Private Equity In Vietnam – Poised For Growth
Private Equity investment in Vietnam remains a significant driver behind Vietnam’s economic growth. The sentiment expressed by those operating in the Private Equity sector has an important impact on the economy as a whole, which this survey seeks to measure.
In this 17th survey on Private Equity Investment, carried out in March 2018, the majority of respondents (84%) were positive about Vietnam’s economy.
2017 was undoubtedly “a good year” for Vietnam, as the economic growth rate and FDI both hit the best level in a decade. Investors’ sentiment has been uplifted in the context of improved global economic growth, stable inflation, and the resurrection of the TPP trade deal which was renamed CPTPP, potentially with the participation of 11 countries.
In this survey, the respondents expressed optimism towards Vietnam’s investment outlook with regards to the acceleration in the level of investment activities, while Vietnam has risen to be the most preferred destination for PE investors in SEA.
In terms of attractive industries, as home to around 95 million people with an expanding middle and upper class and increasing disposable income, Vietnam still expects the consumerism-driven industries to be performing well in 2018. Investments into F&B sector, healthcare and pharmaceuticals and retail are of the most interest to PE investors. Meanwhile, we also noted a rising interest into the education and renewable energy industries.
This year, expectations for deals from private/family owned businesses has increased significantly to the level equal to “SOEs divestment”, each with 33% of respondents.
At the business level, there are various factors that PE investors are interested in. “Strong management team”, “Transparency”, “Strategic fit” and “Cultural fit” are the top factors the PE investors would consider investing in Vietnamese companies.
The picture would not be complete without mentioning the key challenges, as named by PE investors to include inconsistent and non-transparent investment regulations and processes, corruption, and lack of transparency. We, again, have to emphasize the importance of corporate governance and business transparency on the success of the deals. This is also among the hands-on areas that PE investors are trying to improve in their investee companies.
With an optimistic view of the Vietnam economy, we are looking forward to steady growth in Private Equity investment in the upcoming 12 months.
Full report here.