Source : tlip2.com

GIC buy 7.7% stake in Vietnam’s biggest bank, estimated value of S$543 million

Singapore sovereign wealth fund GIC buys 7.7% stake in Vietcombank, which full name is Joint Stock Commercial Bank for Foreign Trade of Vietnam, Vietnam’s biggest bank

As Vietnam looks to liberalise its bloated state sector and streamline regulations, it made the deal to increase openness to external investments.

The Memorandum of agreement (MoU) to buy 305.8 million new shares of Vietcombank, the fund’s first significant direct investment in a Vietnamese commercial bank, was signed by the GIC. The signing was witnessed by Vietnamese President Tran Dai Quang, who was visiting Singapore on Monday.

Bloomberg News estimates the stake to be worth some S$543.6 million in a company worth S$9.4billion.

GIC is also said to have offered Vietcombank technical assistance and support.

The deal is pending regulatory approval and is expected to be completed by the end of the year.

The statement issued by GIC and Vietcombank, said that Vietcombank, which was established in 1963, is Vietnam’s largest lender by market capitalisation.

The growth potential of Vietnam’s economy is among the highest in Asia, benefiting from a young population and a booming export sector that is taking business from higher-cost countries, particularly China, said market observers. The Vietnamese economy is expected to grow 6.7% this year.

Amit Kunal, GIC head of direct investments group for Southeast Asia, private equity and infrastructure, said “This investment reflects our confidence in Vietnam’s long-term growth potential.”

Vietcombank chairman, Nghiem Xuan Thanh, added, “GIC’s strong reputation and experience will provide Vietcombank the support it needs to achieve its financial and business goals, both locally and internationally.”

15% stake in Vietcombank  is owned by Japan’s Mizuho Bank. Vietnamese banks capped their foreign ownership at 30%.

In a separate joint statement, the foreign ministries of both countries stated that  Singapore is Vietnam’s 3rd largest investor, with a total registered investment capital of approximately US$38 billion.(S$51.7 billion).

Formerly known as the Government of Singapore Investment Corp, GIC reported a substantial dip in returns and warned of difficult global investment conditions in the next decade

The US-based Sovereign Wealth Fund Institute says that GIC is the world’s eighth largest stakeholder which has US$344 billion (S$467.5 billion) of assets under management.