Things are looking up for foreign-owned investment funds in Vietnam, reflecting the attractiveness of the domestic investment environment and opening up opportunities for Vietnamese businesses to integrate more deeply into the world economy.
Vietnam’s financial marketplace and peer-to-peer (P2P) lending platform Tima raised US$3 million in Series B funding in early October from the Belt Road Capital Management (BRCM), a Greater Mekong-focused private equity fund. As part of the investment, Senior Investment Manager at BRCM Witt Gatchell will join Tima’s board of directors.
This is the first investment by BRCM in the Vietnamese market. Prior to investment in Tima, the fund also invested US$1.8 million in Australia’s Digital Classifieds Group (DCG) and US$7 million in Myanmar’s Oway.
Gatchell said BRCM decided to invest in Tima as Vietnam is a potential market with a large population, high consumer demand, and expanding middle-class. Over the next seven years, Vietnam’s attractiveness as a financial destination is expected to grow. In addition, BRCM appreciates Tima’s strong management team and the results achieved in the consumer-finance market in recent times and believes in Tima’s strong growth in the future, Gatchell said.
Tima General Director Tran The Vinh said the new funding would be used for expansion in Vietnam’s 63 cities and provinces, besides investing more in technologies and human resources to quickly and conveniently connect borrowers and lenders with financial technologies.
The company is also considering Series C funding proposals from several big funds and investors who could add value to the company for its ambitious growth and expansion plans.
Foreign investors eye Vietnam’s consumer-finance companies
Many Vietnamese businesses have received capital from foreign funds. For example, the Wrap & Roll restaurant chain received US$6.9 million from Mekong Capital, while the Vietnamese food producer Masan Group received a US$250-million investment pledge from the global investor KKR & Co. L.P.
In late September 2018, the DAIWA-SSIAM Vietnam Growth Fund II L.P made a second round of investment in the maternal and baby products chain Con Cung. This leading retail chain for maternal and baby products would use the capital for expanding to about 1,000 stores by 2020.
Economists said that foreign investment funds continuously pouring capital into Vietnam have affirmed the attractiveness of the domestic business and investment environment, as well as provided more opportunities for Vietnamese businesses. Foreign funds are not only involved in financing but also in running invested firms, devising strategies, and expanding their markets. This is true for Tima, which in 2016, raised a series A round from the Dunearn Singapore Fund and G Capital. Thanks to its investment, Tima has grown from a small business with just 20 employees in 2015 to a 150-employee company in 2018.
Businesses with solid technology platforms, professional staff, and strong growth opportunity have caught the attention of foreign investment funds. In particular, these businesses often operate in consumer financing given Vietnam’s potential to boost financial services in the future.
The foreign funds not only help Vietnam resolve financial problems in order to implement strategies to expand their business. They also provide domestic businesses with opportunities to learn about management, market access and expansion, and human resource development.