Vietnam’s Dragon Capital to get $50m IFC debt to deepen corporate bond market

By Deal street Asia, Dam Tuan   April 5, 2016 | 08:11 am GMT+7

HANOI- The International Finance Corporation (IFC), the private lending vehicle of the World Bank Group, said it plans to extend a $50 million financing facility to Vietnam-focused fund management firm Dragon Capital.

Dragon Capital will use the funds to invest in bonds issued by medium to large Vietnamese firms. It will also target private, listed or unlisted fast growing companies who are in need of financing to expand their business.

vietnams-dragon-capital-to-get-50m-ifc-debt-to-deepen-corporate-bond-market

Dragon Capital invests in medium and large Vietnamese firms. Photo: vinacorp

“The proposed project targets to expand the width and depth of the corporate bond markets in Vietnam, to broaden the investor base of the Vietnamese bond markets, and to support and provide Vietnamese private sector companies with better access to capital,” the IFC said in its investment disclosure.

The proposed investment aligns with IFC’s commitment to focus on the financial sector in Vietnam, while also marking its return to back Dragon Capital.

IFC had initially invested $2 million and was an investor for 13 years in the Vietnamese fund manager.

“They bring a lot of experience and have a broad mandate to help finance development. One of the ways they do that is by helping the development of financial institutions,” Dominic Scriven, chairman of Dragon Capital, told DEALSTREETASIA in an earlier interview as he talked about the past investments of IFC and French aid agency Proparco.

Founded in 1994, the Virgin Island-domiciled company is the oldest foreign investment firm as well as the leading asset manager in Vietnam with total assets under management worth around $1.25 billion.

It manages a portfolio of diverse asset classes, including public equity, bonds, private equity, and investments in focused sectors such as real estate and clean technology.

Dragon Capital also offers investment banking services with an exclusive focus on the Vietnamese capital markets, through its affiliate, Ho Chi Minh City Securities, the second largest broking house in which it has 31 per cent stake.

Dominic Scriven and his co-founder John Shrimpton collective hold 70.5 per cent of the company, according to the IFC.

“As of today, Dragon Capital is the only foreign manager in Vietnam with significant fixed-income operations through its subsidiary Vietnam Debt Fund SPC,” the IFC said. The $50-million loan also includes sponsor for the fund, which is dedicated to make investments in the local debt market.

The IFC described its financing to Dragon Capital as a “long-term funding” that will enable the fund management firm to act as a potential anchor investor in corporate bond issuances and to participate in the corporate bond secondary market.

It hopes to get in more financial intermediation and diversify funding sources for Vietnamese businesses, deepening the local corporate debt market while it still under-performs the sovereign debt market.

In an interview with Deal Street Asia last month, Vivek Pathak, East Asia Pacific director for the IFC, pointed out that financial service is one of the corporation’s three pillars of investments in Vietnam that the group has been doing for years.

The IFC has largely invested in and worked with a spate of local lenders such as LienVietPost Bank, Vietnam International Bank, Vietinbank, ABBank and TPBank.

 
 
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