Demand Doubles Size of Vietnam VC Fund

VinaCapital is raising an additional $40 million to $60 million for its Vietnam Opportunities Fund (VOF), PE Week has learned.

The firm held a close of $50 million for its fund just last month. The additional money will raise the total of the firm’s capital under management to between $130 and $150 million. And if its meets it fund-raising target, the expanded VOF would also become Vietnam’s largest country specific venture fund, surpassing those of Dragon Capital and IDG Vietnam.

“Vietnam is finally taking off, as the government loosens restrictions on foreign investment and improves regulations for private businesses in the country,” says Don Lam, managing partner of VinaCapital, which has offices in Ho Chi Minh City, Vietnam, and Palo Alto, Calif.

VOF is publicly listed on the Alternative Investment Market (AIM), a London-based stock exchange. The fund’s structure is similar to other European publicly listed private equity funds, such as Partners Group or 3i Group.

LPs from VinaCapital’s VOF fund includes the three largest holders of its shares: Millennium Partners of New York; Petercam of Brussels; and a former investment group from Deutsche Bank.

VinaCapital invests in such sectors as financial services, real estate, education, consumer goods and retail in Vietnam, Singapore, Malaysia, Thailand and other Southeast Asian countries. VOF was the best performing fund in Vietnam last year with a 25% increase in net asset value and 38% increase in share price, according to the U.K.-based fund research agency LCF Rothschild.

Lam says that VinaCapital is also planning a new fund, to also be listed on London’s AIM. Called the VinaLand Real Estate Fund, it has already completed a close of $30 million. Lam says he anticipates a formal launch in October or November, and a final close for the real estate fund in the first quarter of 2006 for as much as $150 million.

Lam told PE Week that the fund would invest in residential, commercial and office space in Vietnam’s two largest cities – Hanoi and Ho Chi Minh City. Lam says that the firm already has five real estate projects in the works which will be announced at the formal first close.

Lam says that since the passage last year of a law that allows for private real estate registration, the mortgage industry has flourished and Vietnam’s private equity environment is also brisk.

Separately, Lam says that VinaCapital will host its first investor conference in early December in Vietnam. It would be the first major venture conference to be held in the country.