Weekly digest - Jun 02 2021

02 June 2021

TALKING POINTS

WAITING FOR AN INFLECTION POINT

For all Vietnam's attractions as a private equity investment destination – an emerging middle class, a likely beneficiary of supply chain diversification in Asia, an economy that grew in 2020 while those around it floundered – is the local market subscale?

This was one of the takeaways from the AVCJ Vietnam Forum as LPs tempered their enthusiasm for the country with observations that the domestic GP ecosystem is a work in progress. "[Vietnam] is not growing fast enough to attract big ticket investments from high-quality global investors," said Huai Fong Chew, regional lead for the International Finance Corporation's PE funds team covering East Asia and the Pacific. "More time is needed for mid-market firms to grow so they can attract more capital and attract more institutional investors."

There are five Vietnam-based GPs seen as active in the market – more than Indonesia (excluding venture capital). However, two primarily make PE commitments via listed closed-end funds, and their businesses are increasingly diversified across different asset classes. The youngest local GP, one of the remaining three that do raise traditional blind pool funds, was established as long ago as 2007. Fund sizes have yet to move beyond the $250 million range.

Sam Robinson, managing partner for family office North-East Private Equity Asia, emphasized the need for more local managers, not least so the market becomes easier for LPs to benchmark. There isn't necessarily a correlation between the number of participants and the fund size, especially in what Robinson described as a predominantly small-deal market where truly high-quality assets are in relatively short supply.

However, equity checks written by domestic GPs are gradually creeping up in size. The hope is that an expanding consumer opportunity leads to more big wins that really move the needle.

In Depth:
• Vietnam middle market: Room for maneuver - May 2021

• Vietnam GPs: Five's company - May 2018

ANALYSIS

CHINA IPOs: REGULATORY RUMBLINGS

DEAL FOCUS

HAHN EMBARKS ON KOREA DAIRY TURNAROUND

FUND FOCUS

GLORY'S DEEP-TECH THESIS GAINS TRACTION

DEAL FOCUS

NIKANG PURSUES HARD-TO-DRUG TARGETS

By the numbers

AVCJ RESEARCH

VISION FUND DOESN'T HOLD BACK

SoftBank recently announced plans to increase its commitment to Vision Fund 2, currently a balance sheet vehicle. It is already deploying capital with gusto in Asia, with 13 deals - including re-ups - so far this year, according to AVCJ Research. Vision Fund investments are also becoming increasingly geographically dispersed within the region. China and India have historically been the dominant hubs of activity, but the likes of Singapore and Korea are well-represented in 2021 deals to date. Last week's $175 million commitment to education app Riiid is Vision Fund's second in Korea in the past couple of months, joining (Korea-founded but now US-based) messaging platform Sendbird in the portfolio. Coupang, which has turned out rather well for SoftBank, represents the only previous investment in the country.

The rest of the week

UPCOMING EVENTS

• June 23 - AVCJ Chinese PE & VC: The outlook for Q3 and beyond

• July 26-28 - AVCJ Australia & New Zealand Forum

• August 2 - Infrastructure Investors Forum Asia

• August 3-4 - AVCJ Singapore Forum

• August 5 - Southeast Asia M&A Forum