Intel bets on Vietnam’s information highway

"While our average deal process takes four months, the legal process took another four months in VC Corp," Kuppam tells AVCJ. "The entire regulatory framework in the country still needs to make a lot of progress and this was a very challenging experience as compared to other countries."

Although the transaction took twice as long as usual, Kuppam points out that Southeast Asia is a market that should not be missed. While the region is home to a population of 600 million people, broadband penetration has only reached 100-125 million of them. Intel Capital is aiming to invest into the local technology ecosystem, which could enable another 200-300 million people to use broadband in the next three to five years, and 40-50 million in Vietnam in particular.

VC Corp, which was also backed by IDG Venture Vietnam several years ago, has already employed 850 staff in Hanoi, Ho Chi Minh City and five other cities in Vietnam. Intel's contribution will provide the company with working capital.

"IDG came to VC Corp when the company only had a few lines of businesses and subsequently added social networking and e-commerce," says Kuppam. "The company has now established themselves in all of those divisions as they are generating revenue and have credibility in the market place. This time it is more of a growth stage investment."

The company declined to disclose the size of the transaction, but revealed that a total sum of $17 million was invested across VC Corp and Singapore-based Reebonz, one of the largest private sales e-commerce groups in Asia for luxury goods. Intel Capital tends to acquire up to 20% ownership in a single company.

Intel Capital started investing in Southeast Asia in 1999 and has invested $95 million in over a dozen technology companies in the region since then. Its investments have been experiencing double-digit growth in the region and the manager continues to expect it to go up. Several portfolio companies have already gone public, including FPT, the largest IT and telecommunications (ICT) company in Vietnam.

"The single most attractive exit opportunity in Vietnam's tech sector is still the IPO path because we don't see any other exit routes as active," Kuppam adds.

In 2011, 28% of Intel Capital's investments were located in Asia, of which 13% were in India, Japan and Southeast Asia, 12% in China alone and 3% in Taiwan and Korea.

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• Topics
• Southeast Asia
• Technology
• Intel Capital
• Vietnam
• TMT