Vietnam is among top three ASEAN countries attracting Private Equity (PE) investment in term of deal value, according to a report just released by the auditing and business consulting firm Grant Thornton (Illustrative photo: VNA) Hanoi (VNA) – Vietnam isamong top three ASEAN countries attracting Private Equity (PE) investment interm of deal value, according to a report just released by the auditing andbusiness consulting firm Grant Thornton.
The report noted that theVietnamese market saw 38 PE transactions in 2018 with total value of more than1.6 billion USD, only after Singapore and Indonesia. The figures showed a 41percent increase in number of transactions and a nearly three-fold rise invalue compared to 2017.
It is noteworthy that PE investments in start-upsmade up 71 percent of total transaction number, up 56 percent compared to 2017.
Technology still remain high momentum, accounting for40 percent of total deals number.
The report cited the firm’s survey results which showedthe top 6 attractive private equity investment sectors in Vietnam for the next12 months as: Fintech, Education, Green/Renewable Energy, Healthcare andPharmaceuticals, E-commerce, Transportation and Logistics.
According to the report, Vietnam’s e-commerce marketsize (GMV - Gross Merchandise Value) has grown swiftly at a CAGR of 87 percent during2015-2018. By 2025, it is forecast to reach 15 billion USD. Vietnam’s ratio ofe-commerce economy GMV/GDP is 4 percent, far surpassing ASEAN’s average (2.8percent) with very strong competition among market participants.
A rapidly emerging middle class is a key driver forinvestment in education in Vietnam. Vietnam education expenditure is 5.7percent of GDP, ranking 29th among 126 countries in the world.
Despite the market’s attractiveness, Grant Thornton’ssurvey showed that high valuation and lack of attractive deal opportunitiesremained the top two challenges for target identification to most of PE firmslooking at Vietnam, which is consistent with the region.
Another key challenge is low acceptance of companies’owners for PE funding. Concerns about potential conflicts in vision and missiontogether with difficulty in sharing power have made private firms hesitate inco-operating with PE investors
Strict binding terms and conditions came as the nextsignificant concern.
Excessive demand on financial and non-financialdisclosures is another critical concern of private company owners.
If those challenges could be solved, Vietnam willrise higher in the region’s PE attraction ranking.-VNA
VNA
