Singapore sovereign wealth fund GIC will buy a 7.7% stake in Vietnam’s biggest bank, both companies said in a joint statement yesterday. GIC signed a memorandum of agreement to buy 305.8mn new shares of Vietcombank, the fund’s first significant direct investment in a Vietnamese commercial bank.
Vietnamese President Tran Dai Quang, who is visiting Singapore, yesterday witnessed the signing of the deal, estimated by Bloomberg News to be worth some $400mn in a company worth $6.9bn.
Vietcombank, established in 1963, is Vietnam’s largest lender by market capitalisation, the statement said. The bank also plans to allow Japan’s Mizuho Financial Group to buy additional stocks to maintain its 15% holding, Vietcombank chief executive Pham Quang Dung told
Bloomberg News.
The Japanese banking giant in 2011 paid nearly $570mn for its stake.
“This investment reflects our confidence in Vietnam’s long-term growth potential,” said Amit Kunal, GIC head of direct investments group for Southeast Asia, private equity and infrastructure.
“GIC’s strong reputation and experience will provide Vietcombank the support it needs to achieve its financial and business goals, both locally and internationally,” said Vietcombank chairman Nghiem Xuan Thanh.
The deal is pending regulatory approval and is expected to be completed by end of the year.
Singapore is Vietnam’s third largest investor, with a total registered investment capital of around $38bn, the foreign ministries of both countries said in a separate joint statement.
GIC last month reported a substantial dip in returns and warned of difficult global investment conditions in the next decade.
Formerly known as the Government of Singapore Investment Corp, GIC manages Singapore’s foreign reserves with a focus on long-term performance. It does not disclose the exact value of its portfolio, saying only that it has “well over $100bn of assets” in more than 40 countries, including real estate, equities and fixed-income investments. The US-based Sovereign Wealth Fund Institute says GIC has $344bn of assets under management, making it the world’s eighth largest.