HANOI: VinaCapital’s flagship fund, Vietnam Opportunity Fund (VOF), has invested approximately $11 million in Orient Commercial Bank (OCB), a mid-tier retail bank, for an interest of less than 5 per cent. The financing will help OCB diversify its offers to targeted customer segments, including affluent individual customers and small and medium-sized enterprises, VOF said in a statement. The transaction follows two $11 million investments each in construction firm Tasco and FPT Digital Retail that the fund announced in August. “This investment is a rare opportunity to own a meaningful stake in a bank that has high lending and earnings growth. (…) In addition to negotiating an attractive price, we were able to obtain certain minority protections and performance commitments, which made this transaction all the more attractive,” said Andy Ho, managing director of VOF and chief investment officer of the asset management firm. OCB has proposed to list on the Ho Chi Minh Stock Exchange before the end of 2019.
Established in 1996, the bank currently ranks 17th out of 34 local banks in terms of total assets. It has obtained a CAGR of 23 per cent over the past four years, and expects earnings growth of approximately 100 per cent and 30 per cent in 2017 and 2018, respectively. Profit after taxes for this fiscal year is forecast to reach $34.3 million. Founded in 2003 and targeting multiple asset class, VOF focusses on private equity deals. While the consumer and industrials sector accounts for the majority of its portfolio, the financial sector takes up nearly 10 per cent. The fund said, during VinaCapital’s investor conference held last week that it had screened 25 private equity-related deals, totaling $476.3 million in investment size, this calendar year. It has invested $548.1 million in 35 private equity-related deals since inception, $225.1 million of which was deployed in 18 pure private companies. Private equity deals will continue to be stronger opportunities over other types, the fund said, adding that an expected 20-25 per cent IRR was set for private equity investments, compared to 15-20 per cent rate for privatisation deals.
