“Countries like Vietnam can very well stay above five per cent growth for many years to come. That is probably the biggest attraction,”says Mark Decker, CEO of Decker & Co – a US-headquartered institutional broker with offices in New York and Bangkok.
His firm has facilitated the introduction of several Asian companies to investors based out of the US, during the past one year. These companies include the likes of Ha Tien 1 Cement JSC, Group Lease PCL, Thaire Life Assurance PCL, Xurpas Inc and most recently the HCM City Infrastructure Investment JSC (CII).
Two of the above companies – Ha Tien 1 Cement and CII – are from Vietnam.
Decker, an emerging and frontier Asian market veteran, has moved his family to Vietnam after he realised the investment opportunities here. With a background of finance, and earlier work tenure at Lehman Brothers, Siam Commercial Bank and Maybank Kim Eng Securities, he built on his expertise at Decker & Co and has brought its services to 13 Asean and Asia frontier markets.
Edited excerpts of his recent interaction with DEALSTREETASIA:
Why do you think international investors have shifted from developed markets to frontier and emerging markets like Vietnam? What is the interest of US investors in Vietnamese equities?
In short, it is simply searching for growth, young population and a growing middle class, and Vietnam hit all three of those. When you look at the globe, the US or more developed Asia like Thailand and Singapore, GDP growth numbers are between one to maximum three per cent. Countries like Vietnam can very well stay above five per cent growth for many years to come. That is probably the biggest attraction.
We have seen the continued movement from China to Southeast Asian countries, which Vietnam is a big beneficiary. I was in KBC industrial park (developed by Kinh Bac City Development Holding Corp) outside of Hanoi a couple of weeks ago, there is no question that the amount of north Asian companies that perhaps five years ago absolutely set up in China, are setting up operation in Vietnam. Vietnam is becoming an absolute quality alternative to China.
The young, industrial people in Vietnam are the biggest attraction. I have seen a lot of young companies being run quite well that attract American investors.
Did the investors make investments or prefer to form partnership with Vietnamese firms?
We work really hard to find well-managed companies in Vietnam. That is the first and foremost objective. Once we find good quality management, we can introduce that management to the US investors. Warren Buffet was the first investor, some 30-40 years ago, who said “I would not buy a company until I meet the C-level (CEO, CFO etc) management”. Before that, people just used analysis, research report and data points. I believe that my role is to truly find well-managed companies, and once we introduce them to US investors, the answer is yes to your question. I would not say any partnership has been formed but absolutely every company that we have introduced to US investors has received some forms of investment.
The biggest hurdle, I believe you hear it all the time, all comes back to the foreign ownership limit. As per the general liquidity of the stock, how much does the stock trade? Are there enough shares for investors to buy?
How do you think about the recent legal change to remove the limit? Is this a great opportunity for US investors?
I think it is an absolutely great step. The implementation of the regulatory change will take some time, but it is very bullish. No questions in my mind that foreign investment into Vietnam is about to grow significantly.
What is the profile of the investors?
They are funds. I would say 95 per cent investment funds and maybe five per cent private equity funds.
So what are the opportunities you see from Vietnamese equities?
There are opportunities outside of the key cities Hanoi and HCM City, where we see smaller hospitals, healthcare sector, anything to do with infrastructure, and anything related to consumers. You’ve seen growth of retail outlets, franchise restaurants – which are interesting to foreign private equity investors – and largely I would say hi-tech related segment.
Vietnam has incredibly well educated young people. When it comes to outsourcing, the Philippines and India have done a really good job in the past years to produce well-run companies to handle the outsource of IT work, programming and software development. That type of investment will come largely to Vietnam as well. I am so impressed with the young people I meet. It is unlike anything I have seen in Southeast Asia, and I have been in Asia for 20 years. Compare graduates coming out from tech universities in Vietnam versus Indonesia, Thailand, even Malaysia, I think the quality of the young people is much higher than the neighbours.
Investors have known about big firms like Vinamilk or Masan. What are the other opportunities?
I think Mobile World is very attractive and has not reached the foreign ownership limit. That company is on the radar of American investors. I also think there is a higher level of anticipation that there will be some forms of cleaning up of the banks. So Vietcombank is something very interesting that people are looking at. Related to the infrastructure of the ports, Middle Airports Services JSC in Da Nang is small, but the airport service firm will double in size. It is 35 per cent owned by the Vietnam Airlines, so there are opportunities to tap the clients for the catering services. In general, people are interested in the Phu Quoc island. Superdong Fast Ferry Kien Giang JSC is a ferry service taking people from the south to Phu Quoc island. It is the perfect play for investors who eye investments in the island.
Source: Dealstreetasia
Key words: Vietnam hits investors’ search, for growth, Mark Decker
