Investment funds say ready to inject money into SMEs

Vietnam captures attention from foreign investment funds owing to its fast-rising consumption driven by a young population, and economic growth will continue to rely on the private sector, especially SMEs, investors said at a conference in HCMC.

They said at the Southeast Asia Private Equity Conference that opportunities in Vietnam were still ample owing to the high economic growth rate. SMEs, especially those that have gone public, provide better chances for investors compared to big-scale State enterprises.

Karl Theisen, managing director of Thunderbird as the organizer of the event, said the global economy was still able to grow thanks to emerging markets like Vietnam. He said Vietnam had a big number of SMEs, which is an advantage for attracting foreign investment funds.

Thomas Lanyi, director of the investment fund Mekong Capital, said Vietnam would be the destination for private equity funds in the next couple of years. Many new funds would certainly be established, and each fund would have its own way of making investments appropriate to market conditions, he said.

Echoing the view, George Raffini, director of the fund Heartland Capital Partners, said private equity funds would form the driving force behind Vietnam’s economic growth in the coming years.

However, he commented that private investment funds were finding it difficult to approach the Vietnamese market due to problems relating to the investment environment, the legal corridor as well as the economic administration in Vietnam.

Thomas Lanyi of Mekong Capital said other problems included difficulties in divesting capital and the restricted market of initial public offerings.

Investors at the conference also raised concerns over the macro-economic uncertainty in Vietnam, such as foreign exchange risks, high inflation, and other financial risks.

Private investors making investments in Vietnam often hope for a high rate of return of around 30%. However, given the tough time caused by high inflation, a rate of return of some 18% would be agreeable, they said.