VinaCapital to focus on organic growth

CEO Don Lam says the company has no plans to launch onshore funds for now because local investors generally still prefer to invest directly in stocks.
Boutique fund management company VinaCapital, which has grown from managing $10 million in Vietnam in 2003 to $1.9 billion, is stepping on the brakes for new portfolio launches for now and focusing instead on organic growth.

The company, led by CEO Don Lam, manages four offshore funds: its flagship $840 million Vietnam Opportunities Fund, the $635 million Vinaland Fund, the $400 million Vietnam Infrastructure Fund, and the $30 million Draper Fisher Jurvetson (DFJ) VinaCapital Fund. The first three funds are listed on the London Stock Exchange while the DFJ fund is a limited partnership.

ôWe have no plans to launch a new fund at this point,ö says Lam. ôWhat we are looking at now is focusing on the four funds that we have and increasing capital if we need it by issuing new shares.ö

VinaCapital just finished last week its seventh round of fund raising for the Vietnam Opportunities Fund, and generated $332 million from investors, higher than the $285 million target. The investors are mostly from Europe and the US. Around half are private banking clients or high net worth individuals, around 40% are institutions, and the rest are retail investors.

While other fund management companies are just beginning to put together sector-specific funds, VinaCapital already has three that invest in property, infrastructure and technology.

VinaCapital is not targeting local retail and institutional investors at the moment.

ôDomestic investors still like to invest by themselves and not through funds. They have to get used to the idea of investing in funds,ö says Lam.

Lam notes that the recently launched Manulife Progressive Fund, which mainly targeted local investors, managed to raise only less than $20 million.

ôKeep in mind that fund is very small in size. The question is whether you want to put enough effort into that type of a fund,ö he says.

VinaCapitalÆs flagship Vietnam Opportunity Fund has posted a return of 252% since its launch in September 2004. Lam notes that an investor who put $1 million in that fund at the launch is now sitting on $3.8 million in total assets.

That fund invests in a whole range of companies that are gaining from VietnamÆs domestic economic growth. The funds top holdings include dairy products producer Vinamilk, steel manufacturing and trading company Hoa Phat, and Refrigiration Electrical Engineering, which is involved in consumer, commercial and industrial air conditioning systems and refrigeration.
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