Vietnam Private Equity Outlook

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HCM CITY (VNS)— Investors viewing Viet Nam's investment environment favourably has increased over the last six months, according to a bi-annual survey on the nation's private equity outlook done by Grant Thornton Vietnam.

The survey found 41 per cent of respondents saying they feel Viet Nam is a more attractive place to invest compared with other destinations, an increase of 14 per cent over the previous survey six months ago.

The financial distress in Europe and weakening of the US dollar are the main factors for private equity activities continuing to rise in Asia, especially Southeast Asia.

Hence the number of respondents who decided to increase their portfolio in Viet Nam has improved significantly from 29 per cent in Q4, 2011 to 45 per cent in Q2, 2013, although the country is still suffering from the economic downturn.

Healthcare and pharmaceutical industries have been the most favoured investment areas in the last three surveys.

High growth rates, demand for expertise as well as favorable demographics have created a significant opportunity for investors to invest in Viet Nam's healthcare sector, the survey found.

Education remains the second most attractive sector for survey participants with the same proportion as last year survey (39 per cent). It has been in the top rung for more than three years in succession.

Viet Nam is ranked fourth in terms of the most attractive market in the world for the retail sector, which has grown robustly in recent years.

The Government's approval for foreign investors to establish 100 per cent foreign-invested companies has made this sector highly attractive to investors.

The fourth most attractive sector, according to the survey, is real estate and property, which got 37 per cent of the respondents' votes.

Merger and Acquisition (M&A) deals in the real estate sector were forecast to increase in 2013. Many real estate developers facing financial difficulties were forced to transfer their projects, creating investment opportunities for buyers with long-term strategies.

The largest investment in the sector last year was by Japan's Tokyu Group with a total capital of US$1.2 billion.

On investment obstacles, 82 per cent of the respondents considered corruption and government red tape as problems when investing in Viet Nam, with the latter component showing an increase of 10 per cent since the previous survey.

Current difficulties and challenges in the economy means PE investors are becoming more prudent in their investment strategy and focusing on long term growth opportunities, the survey found.

Transparency in business activities emerged as the second most important factor in making investment decisions. This factor has always been in the list of the top three most important factors to consider when investing in Viet Nam, the survey report said.

The third most important factor was cash flow, the life blood of every business.

Others factors included corporate governance and the skill as well as experience of existing management. — VNS

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