Sunday, August 19, 2007

World Bank says Vietnam needs $140 billion for infrastructure over next 5 years

VinaCapital launches Vietnam Infrastructure fund

UK-listed fund manager VinaCapital launched Tuesday a Vietnam Infrastructure Limited (VIL) fund which will focus on hydropower plants, roads, ports, airports, and telecommunications in the country.

VinaCapital’s fourth fund has a corpus of US$402 million mobilized abroad.

It will earmark $100 million for hydro and thermal power plants and industrial parks. The rest will be used to buy highway toll rights in large cities and participate in projects to upgrade airports to international standards in the next 12 to 18 months.

On launch day VIL signed two separate deals with Vietnamese companies for road and power projects.

Under a deal with Vietnam's leading industrial infrastructure developer, Tan Tao Industrial Park Corp (Itaco), VIL will contribute 40 percent of the capital required for a coal-fired power plant in the southern Long An province.

The plant is estimated to cost $800 million.

Don Lam, chairman of VinaCapital, said the fund will borrow to pay up 70 percent of its share.

The power plant would import coal from Australia or Southeast Asian countries for electricity generation, and 60 percent of its output would serve Itaco's projects while another 40 percent would be sold to the state utility group.

VIL also teamed up with the Hanoi-based Transport Materials and Construction Company to invest in a road project in the capital city.

In other transactions so far, the fund has paid $19.5 million to buy a 3.8 percent stake in Itaco, which operates the Tan Tao IP in Ho Chi Minh City, $1.97 million for a 2.4 percent stake in the Thac Mo Hydro-Electricity plant, and $3.95 million for a 5.2 percent stake in Ba Ria Hydro-Electricity plant.

The new fund aims for an average annual return of 20 percent on its investments.

Vietnam’s rapid growth over the last decade has placed increasing strains on its ageing infrastructure with demand fast outstripping supply.

According to the World Bank, Vietnam will need to invest $140 billion in infrastructure over the next five years.

Established in 2003, VinaCapital manages $1.8 billion which it has invested mainly in HCMC, Hanoi, Da Nang, and Hong Kong.

These include the $800 million VOF (Vietnam Opportunity Fund), the $600 million Vinaland Limited, the $420 million VIL and the $50 million DFJ VinaCapital L.P. which invests in information and communications technology firms. The first three funds are listed on AIM.

VinaCapital has recently received the nod to build a $325-million commercial-residential complex in the central Danang city.

To be built in Son Tra district, the 9-ha VinaCapital Square complex will have two trade centers, two deluxe hotels with 600 rooms, a 25,000-sq.m exhibition and conference center, and a 42-story office block.

The largest-ever property project in the city will also have around 1,300 luxury apartments and a villa area.

Source: PR, Thanh Nien, TBKTVN – Compiled by Dong Ha