Good morning Vietnam…Let’s go shopping!

Global deal activity in 2013 so far appears to be being driven by private equity keen to both invest funds raised just before and post the financial crisis and which are also under increasingly tight time constraints to exit investments made pre-2010. This has led to an increasingly buoyant secondary and even tertiary buyout market and also an increasing appetite for geographical markets that are still in their infancy in terms of private equity deal exposure.

“Next Eleven” or “CIVET” country Vietnam, appears to benefitting from this increased private equity appetite. In January of this year, Kohlberg Kravis Roberts (KKR) increased its stake in Masan Consumer Corporation, investing a further $200m on top of the $159m it paid for 10 per cent of the company back in April 2011, and yesterday saw the announcement of a second substantial private equity deal for the country. Warburg Pincus announced that it has entered in to a definitive agreement to acquire 20 per cent of Vincom Retail, a Vietnam-based shopping mall operator that also happens to be part of one the largest companies by market capitalisation listed on the Ho Chi Min Stock Exchange.

According to the press release issued by Warburg Pincus, the investment is to enable Vingroup to build out its existing retail property business and to explore future opportunities, and Warburg Pincus have signed definitive agreements committing them to any future fund raising the group might consider.

Vietnam has one of the world’s fastest growing domestic retail sectors and, according to a forecast by PricewaterhouseCoopers in 2008, Vietnam may be the fastest growing of the emerging economies within the next 12-15 years. So in theory there should be plenty of demand for retail property to meet the requirements of a growing economy.

Filed under: retail, private equity