VinaCapital: Vietnam remains attractive destination to foreign investors

March 29, 2010

Rebuilding trust pays positive dividends  – VinaCapital’s CEO Don Lam talks about how his company has performed and what it plans for the future.

The Asia Asset Management “Best of the Best” fund management awards are in its seventh year. There are a wide range of categories, including the “best fund house” award for each country in the region. I don’t know what other fund managers applied for the awards, but we are very happy to receive the recognition as it puts our brand alongside other winners from world-renowned companies like JP Morgan Asset Management, HSBC Asset Management, and Franklin Templeton, as well as country-level fund managers like Mirae from South Korea and Singapore’s UOB.

My understanding is that the award for “best fund house” has a number of criteria, from overall market share and net assets raised, to the depth of the investment team and client servicing. For VinaCapital, in addition to demonstrating the rapid growth of our net asset base and our investment results, we were able to demonstrate the important role VinaCapital has taken in educating private and institutional investors around the world on the opportunities available in the Vietnamese market. Our slogan is “taking Vietnam to the world” and this helps define our approach to working with investors.

I believe we have a very good track record of investor relations, including updating our fund shareholders and reaching out to other potential investors. Our participation in the World Economic Forum (WEF) in Davos, for example, is evidence of this approach. We were the first Vietnam-based company to join the WEF and we lobbied extensively for the WEF regional meeting that will be held in Ho Chi Minh City this year.

We are happy to be involved in this effort, and I believe Asia Asset Management did consider this broader approach to business growth when selecting its country-level winners.

How about VinaCapital’s performance last year and its plans in 2010?

VinaCapital like all asset managers over the last 12 months faced the important challenge of rebuilding investor trust following the global financial market crisis of 2008. It’s not a pleasant number to bring up, but during the financial crisis of 2008 VinaCapital’s asset under management declined by about 25 per cent.

This was actually a strong performance compared to many fund managers, but for 2009 our goal was to demonstrate to our shareholders that we remain in a position to make good investments and to grow their money. We announced several deals over the past year – such as the Masan equity sale and the Hilton Hanoi hotel sale – that helped demonstrate to our investors that our funds were still holding high-value assets.

For 2009, VinaCapital was able to increase the combined net asset value of its funds by 6.6 per cent, which is an acceptable result given the difficult investment environment.

For 2010, our main objective is to increase the share prices of our funds, as they are still trading at a discount to the underlying net asset values. The issue here is essentially investor confidence in the market. When a fund trades at a discount, the market is essentially expressing doubt over the published value of the fund’s holdings.

Fund managers can respond in many ways – by selling assets as needed to generate income, and possible issue a dividend or buy back shares to lift the share price. We are currently reviewing all options available to our funds and will update our shareholders as soon as possible.

In terms of investing strategy, nothing has changed – we aim to buy into good companies and projects, help improve their operations or develop the assets, then exit in a manner that will generate a return for both our Vietnamese partners and our shareholders.

How do you foresee the investment opportunities in Vietnam in the years to come and does VinaCapital have any plans for raising new funds?

The domestic economy is growing at a healthy rate in 2010 and we expect to see deals across a range of sectors. In real estate, we have several important initiatives to bring a new quality standard to the residential market. We recently announced the VinaProjects joint venture to manage the development and construction of our real estate projects, and other interesting announcements in this area will follow soon.

In equities, there are a broad range of sectors that we are interested in, including health care, financial services, education and certain types of agribusiness.

As for new funds, we intend to raise a new unlisted real estate fund this year, which will target institutional investors that do not invest in listed companies, such as our current real estate fund VinaLand Limited. As an unlisted fund, the new offering will attract a different type of investor from our existing funds, which are listed.

Some institutional investors do not invest in listed funds, so we are just creating an opportunity for investors who otherwise would have few options to invest in Vietnam.

“VinaCapital Group is one of the largest foreign investor in Vietnam’s real estate market, with considerable local knowledge and experience. The VinaCapital conference which was held on Oct. 25 -27, 2009 in Hanoi attracted more than 200 foreign investors and business leaders who wanted to know about Vietnam market and the investment opportunities in the coming up years. Attending the conference also was Mrs. Katherine Yip Geicke who is one of Asia’s leading business women and is a Founding Partner and Advisor to the Board of VinaCapital; Professor Kenneth Courtis – former vice-president Goldman Sachs; Mr. Marc Townsend – CEO of CB Richard Ellis Vietnam; and VinaCapital Group leaders”