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Singapore's GIC to take 7.7 pct stake in Vietcombank

30/08/2016

Singapore’s GIC has agreed to buy a 7.7 per cent stake in Vietcombank, one of Vietnam’s biggest commercial banks, in the latest indication of the sovereign wealth fund’s appetite for emerging markets.
GIC said it will purchase 305.8m new shares in the bank, but did not disclose the value of the transaction.

Shares in Vietcombank have risen almost double the 16 per cent increase notched this year by the benchmark VN index, including a climb of more than 10 per cent so far this month.

That gives it a market capitalisation of just under $7bn, although it is not clear whether GIC will pay the implied valuation of more than $500m for its 7.7 per cent stake in the enlarged share capital, or receive a discount.

The Singapore investment group has raised its exposure to emerging market equities, while reducing developed market equities, as it makes a long-term bet on the rise of Asia’s middle class.

Amit Kunal, head of direct investments for Southeast Asia at GIC, said: “This investment reflects our confidence in Vietnam’s long-term growth potential.”

Vietnam is back in favour with emerging market investors after returning to gross domestic product growth rates of more than 6 per cent, thanks to growing consumer demand and big export manufacturing operations set up by multinationals including Samsung and Intel.

The country of 90m people had suffered economically as the western financial crisis kicked in, a property bubble burst and bad debt problems emerged at big state companies.

Some debt problems remain and drought also dragged growth back in the first quarter of 2016, casting doubt on whether the official full-year target of 6.7 per cent would be achieved.

The wider banking sector in Vietnam has also been buffeted by bad debt problems and cyber attacks.

Nghiem Xuan Thanh, chairman of Vietcombank, said: “GIC’s strong reputation and experience will provide Vietcombank the support it needs to achieve its financial and business goals, both locally and internationally.”

GIC said it would also offer technical assistance and support to Vietcombank. The Singapore fund’s investment is part of a private placement of 359.8m shares by the Vietnamese bank. Mizuho acquired a 15 per cent stake in Vietcombank in 2011.

Over the past financial year, ending on March 31, GIC has reduced its exposure to developed market equities from 29 per cent of its asset mix to 26 per cent, while increasing emerging market equities from 18 to 19 per cent.

dtinews.vn, ft | August 30, 2016 09:41 AM

 

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