Techcombank staff handle stacks of Vietnamese dong (Source: Reuters) Hanoi (VNA) – Two separate legal entities managed by Warburg Pincuswould invest over 370 million USD in the Vietnam Technological and CommercialJoint Stock Bank (Techcombank), announced the bank on March 12.
The investment will be subject to regulatory approvals.
Warburg Pincus is a leading global private equity firm focusing on growthinvesting. The investment is part of Techcombank’s equity raising effort toprovide growth capital to fund its expansion and further solidify its leadingposition in Vietnam.
As the pre-eminent private equity investor in Vietnam, this transaction ofWarburg Pincus represents the largest-ever private equity investment in thecountry and brings Warburg Pincus’ total investment in Vietnam to over 1billion USD.
Techcombank, established in 1993, is one of the largest private sector banks inVietnam in terms of total operating income and pre-tax profit as of 2017.Moody’s rated the bank as one of the highest among Vietnamese private jointstock banks, with a rating of B2/positive; S&P awarded the bank a creditrating at the same level as the sovereign.
Nguyen Le QuocAnh, CEO of Techcombank, said: “The Vietnamese market is at aninflection point. We are delighted to welcome Warburg Pincus as our partner,and we look forward to working with them to pursue new high-growthopportunities and further our aim to be the leading bank in the region withinthe next decade.”
Vietnam’s banking penetration rate remains quite low at just over 30 per cent,according to 2017 figures, compared to other Southeast Asian countries,including Indonesia (56 percent), Thailand (71 percent) and Malaysia (77percent).
This provides strong headroom for growth. While nascent, the Vietnameseconsumer lending sector is rapidly emerging, and total outstanding consumerloans have tripled between 2013 and 2016 as the affluent class actively seeksproducts such as mortgages, auto loans and credit cards.
Jeffrey Perlman, managing director and head of Southeast Asia at WarburgPincus, said: “The investment in Techcombank marks our continued commitment andstrong belief in the long-term prospects for Vietnam. Vietnam is one of thefastest growing banking markets in Southeast Asia, and the bank is wellpositioned with its leading retail franchise and best-in-class management teamwith strong local and international banking experience. We expect Techcombankto further consolidate its dominant position in Vietnam and become one of theleading banks in Southeast Asia.”
Saurabh Agarwal, Managing Director of Warburg Pincus, said the Vietnamesebanking sector was highly under penetrated and had a strong potential foroutsized growth.
Warburg Pincus started investing in Southeast Asia in 2013 with Vietnam as itsmaiden market. Since then, it has invested in seven companies in the region,including Vincom Retail, Lodgis Hospitality, BW Industrial Development JointStock Company, ARA Asset Management, Go-Jek, NWP Retail and Trax.
On the same day, Techcombanktranferred all of its capital at its subsidiaryTechcomFinance to Republic of Korean conglomerate Lotte Group’s credit cardarm, Lotte Card.
In the third quarter of 2017, the State Bank of Vietnam passed the deal, whichwas part of Techcombank’s plan to focus its strength on key businesses.
TechcomFinance, which has a charter capital of 600 billion VND, was set up in2015 after Techcombank acquired 100 percent stake in the Vietnam ChemicalFinance JSC, a subsidiary of the Vietnam National Chemical Group, during thegroup’s restructuring process.
According to TechcomFinance’s financial report of 2017, its total revenue was28.7 billion VND, while its total expenditure was 7.1 billion VND. Its pre-taxprofit reached 22.5 billion VND last year.
Lotte Card, founded in December 2002, provides financial services such ascash-lending credit cards and installment payment services.-VNA
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