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This is the latest in a wave of Vietnam equity funds aimed at foreign investors, with specialists like PXP Asset Management and VinaCapital having recently introduced new products or expanded access to existing funds.
A big impetus is a rush of initial public offerings to beat the end of tax breaks for listed companies. The IPOs and privatisations should boost VietnamÆs market cap from $3 billion to $5 billion in the space of a few months.
But while the market is now supportive of new Vietnam products, Prudential says itÆs not the reason for launching the new fund, called the Vietnam Segregated Portfolio.
ôItÆs not about timing the IPOs,ö says Ajay Srinivasan, CEO for fund management at Prudential Asset Management in Singapore. ôItÆs about us looking at the market and seeing opportunities there.ö
Srinivasan says this is the latest step in PrudentialÆs evolution in Vietnam. First its life insurance branch established a local investment capability, to manage its own assets. Then last year it became one of two firms licensed to introduce domestic, dong-denominated mutual funds. (Dragon Capital is the other.) Now it wants to leverage its local expertise to create investment vehicles for global investors.
The new product is managed by Prudential Asset Management in Singapore and sub-advised by Prudential Vietnam Fund Management Company, its HCMC-based investment business registered with the State Securities Commission.
Alex Hambly, CEO at the local fund company, leads a 12-member investment team that now manages around $700 million for the life company and $30 million for its domestic mutual fund.
Hambly says the teamÆs process is based on private-equity principles, as it was established three years ago when there was no stock market. His team now has a portfolio of 12 listed companies, 10 stocks traded over the counter, five private-equity investments and three property plays.
ôWeÆve fully deployed our assets,ö Hambly says, noting that the team has achieved roughly an aggregate return of 150% year to date, although the booked valuation of the PE investments would reduce this somewhat.
He says the firm doesn't have a hard target for the Vietnam Segregated Portfolio. As of Friday: ôThe phone hasnÆt stopped ringing for the past three days,ö he says. While raising anything less than $100 million would be a disappointment, the firm would like to see something around the $150 million mark û a size Hambly says it can fully deploy within a year. Prudential would have trouble handling sums over $250 million, he notes.
The fund will invest in mix of assets. Prudential researches a universe of 30 local stocks. ôWeÆll invest when we see fair value. Things are pricey now,ö Hambly says. Next the team will invest in privatisation stories, and then into an existing pipeline of private opportunities.
Hambly acknowledges that other firms have launched similar products, but says: ôWe are the only international brand here, with full compliance and auditing. Our team has international private-equity experience.ö
He moved to Vietnam in 2003 after investing in private equity in Southeast Asia and India. Craig Martin has done PE for Standard Chartered Bank in the Mekong area for 14 years. Andy Ho is a US-educated Vietnamese accountant who worked for Michael DellÆs Dell Ventures. And Prudential also boasts VietnamÆs first two CFAs among its senior investment professionals.
Similar to other international Vietnam funds, the Segregated Portfolio charges a 2% annual management fee plus a 20% performance fee above a watermark of 8%. It is being distributed by Prudential in Singapore.
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