We take our role very seriously and work closely with our partners to add value to their businesses.

The role of a strategic investor is very dynamic and that’s the approach we take when we invest in a company.

What are the benefits of strategic partnerships?

When we invest in a company as a strategic partner, we provide the company with a number of things including equity capital. More importantly, we provide business support in areas including accounting/finance, technology, marketing and human resources.

In our experience, there are three or four areas that Vietnamese companies have problems with, so we work closely with them to improve on their weaknesses. One company may be very strong in finance, but has a deficiency in human resources. Our job is to identify where we can help add value.

Can you explain why foreign partners have recently bought strategic stakes in Vietnamese companies at above market prices?

There has been a very specific shift in the Vietnamese market over the last four months. If you are an investor, it is very easy to buy 1, 2, 3 or 4 per cent of a company. But if you want to buy 5 or 10 per cent, it can be very difficult. Because of this lack of access, many foreign investors are willing to pay premium prices to get what they want.

I expect that this practice will continue in Vietnam as long as there is a strong market. Right now there’s too much money and not enough companies to invest in.

What criteria are used in selecting strategic partners?

If you think about a strategic partnership, it’s like a marriage. The most important criterion is an open and dynamic management team. What a partner needs is a management team and company that shares their vision.

Two parties with the same vision form a strategic partnership. I think that’s critical. In a marriage, you may not always agree on everything. Because of this, it takes a strong commitment that will remain in place when the market is doing well and when business is bad and people are not happy. It is very important that both parties realise that a strategic partnership is a long-term proposal. Both must know that there will be ups and downs, and they can’t walk away when things are tough.

In addition, I do not think it matters whether it is a foreign or local partner. In the past there were many partnerships signed between domestic companies. There are big companies like Vinamilk and FPT that can assist emerging blue chip firms.

I believe that when domestic companies become stronger and more confident and earn their place in the market, we will see more and more domestic partnerships. That is a good sign for the Vietnamese market.

What do you think about the possibility that foreign firms could buy out their Vietnamese partners to control a 100 per cent stake?

I’m personally very excited for that possibility. This is a process called buy-out and it’s done in all other major markets, including the US.

In Vietnam, my personal view is that we’re still five to 10 years away from this trend. Even if tomorrow the government gave permission for a foreign company to buy a 100 per cent stake in a company, most foreign firms, us included, would not do so.

The reason for this is corporate governance in Vietnam is still very weak and management capabilities are still private relationship-based.

Another reason is that in most developed countries, when you buy a company you are permitted to change in the entire management team, something you would not be able to do here [in Vietnam].

Source: VIR