The epidemic has not only exerted pressure on the stock market but has also become a big barrier to private equity flows as well as venture capital.

private equity funds,Covid-19,SMEs,vietnam economy



Excelsior Capital Vietnam Partners began in a difficult situation. This is the sixth PE fund of Excelsior Asia Capital (Switzerland) established with an aim of investment in Vietnam.

Hoang Xuan Chinh, Excelsior Capital CEO in Vietnam, confirmed that the fund has completed the first round of fund raising with the initial capital of $62 million, Excelsior Vietnam plans to raise $200 million worth of funds and have operation duration of 10 years.

Regarding the investment targets, Chinh said Excelsior will pour capital into SMEs in Vietnam operating in healthcare, pharmacy, education, manufacturing, distribution, retail and logistics, the fields believed to have high potential for development in Vietnam.

Despite the Covid-19 crisis, more private equity funds have been seeking ways to enter Vietnam as investors see bright prospects in the long term.

Excelsior plans to invest $6 million or more in each deal and make long term investment (4-7 years).

 

In order to get capital from Excelsior, businesses need to have proven successful business models and have turnover of about $10 million or more, or need to have strong growth prospects.


However, according to Chinh, one of the most important criteria the fund will consider when making investment decisions is the quality of the leadership (vision and execution capability).

Excelsior's investment criteria have some similarities with Mekong Capital and VI Group, but each fund follows its own principles.

According to David Do, CEO of VI Group, VI Group mostly invests in businesses with high growth rates and starts giving support to businesses right from the first development period to help increase value in the long term.

VI Group has set up three investment funds with total investment capital of $400 million and has poured capital into Thien Minh, QSR Vietnam, AMA, Namm Long, Gemadept, Vinafco, VNF, VNDirect, HiPT and Khai Toan Group.

After 19 years of operation, Mekong Capital has become one of the most successful PE fund management companies in Vietnam. Mekong Enterprise Fund II (MEF II) has a rate of return of 4.6x and internal rate of return (IRR) of 22.7 percent.

Some other new investment deals of Mekong Capital managed by MEF III, also have high growth rates. In Q1 2020, F88 opened 39 new branches. The figure was 40 for Pharmacity. Nhat Tin reported revenue growth rate of 30 percent in Q1, while ABA Cooltrans reported revenue increase of 40 perent.

According to McKinsey, Vietnam’s SMEs need huge capital of up to $21 billion. However, most of them cannot access loans.

Le Ha 

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