Hanoi, Vietnam, December 4, 2001
—The International Finance Corporation will strengthen Vietnam’s capital markets and its institutional investor base with an income participation loan investment of up to US$12 million in Vietnam Enterprise Investment Limited (VEIL), a closed-end fund dedicated to Vietnam which will invest in a balanced portfolio of Vietnamese-run and owned companies.
As the experience of other transition economies has shown, a robust institutional investor base can facilitate successful ownership transformation and stock market development. VEIL’s active involvement in the management of its investee companies will strengthen their corporate governance and enhance opportunities for growth.
Incorporated in the Cayman Islands in 1995 and listed on the Irish Stock Exchange, VEIL successfully closed its third fundraising at $16.4 million in September 2001, bringing its total assets to $46.4 million. VEIL has gone from being the smallest Vietnam-dedicated fund at its inception six years ago to the largest country-dedicated fund in Vietnam today.
Vietnam has no domestic fund management companies at the present time. Investments by foreigners are made through offshore Vietnam-dedicated funds. VEIL's strategy is to invest in companies potentially eligible for listing on the Securities Trading Center (STC), Vietnam’s first centralized securities exchange, adding value and helping them get listed through the restructuring of their business operation. VEIL invests in diversified industries including light manufacturing, banking, software development, and agri-processing. Many of the companies that VEIL has invested in have been privatized—a process in Vietnam known as “equitization”—and a number of companies have already been listed.
IFC is also planning to invest in Dragon Capital Group (DCG), an offshore merchant bank and fund manager of VEIL. IFC will assist DCG to further develop its fund management and advisory services and provide guidance on building its expertise in the structuring of complex and innovative transactions.
Peter Woicke—Executive Vice President of IFC and Managing Director of the World Bank Group for private sector development—who is traveling in Vietnam on his first official visit to the country, said at the signing, “The project is an efficient way of channeling long-term financing from institutional investors in VEIL to small and medium enterprises, thus enhancing their growth potential. It will increase the number of Vietnamese companies eligible for listing on the STC. This, in turn, will support the Vietnamese government's recent market reform initiatives, promote the STC’s development and increase its liquidity, and introduce best practices in Vietnam’s fledging merchant banking industry.”
IFC’s mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses. Since its founding in 1956, IFC has committed more than $31 billion of its own funds and arranged $20 billion in syndications for 2,636 companies in 140 developing countries. IFC’s committed portfolio at the end of FY01 was $14.3 billion.
