Indochina Capital Vietnam Holdings, an investment company focussed on Vietnam, listed with the ticker symbol ICV on the London Stock Exchange on March 2, and clearly timed its public debut well. It planned to raise $300 to $350 million through a share offer arranged by Credit Suisse but upsized to $450 plus a $50 million greenshoe option, which is a provision contained in an underwriting agreement that gives the underwriter the right to sell investors more shares than originally planned by the issuer.
Credit Suisse was the sole bookrunner for the placing.
Anchor investors û people who had a guaranteed allocation, but no lock-up or cheaper entry price - took $225 million. If you exclude the anchor investors, the deal was 4.5x oversubscribed (or 2.5x oversubscribed including the anchors).
The deal saw balanced distribution, with about 40% of the buyers out of Asia, 40% out of Europe and another 20% from the United States/offshore hedge funds, and a mixture of long only, hedge funds, private banking and private equity.
The large Asia share of buyers may reflect many of the regional investorsÆ knowledge of the company and key players. Indochina Capital Corporation was founded by Peter Ryder and Rick Mayo-Smith in 1999 as a financial services firm to engage in a variety of investment and advisory activities in Vietnam.
Both may be young, but they are old Asia hands. Mayo-Smith advised Morgan Stanley and Citicorp Capital on the Indochina region in the 1990s. Ryder formerly ran Salomon BrotherÆs Asian real estate finance operations, and is also responsible for many of VietnamÆs prominent foreign-invested real estate properties. The company also boasts the ever-energetic former Goldman Sachs banker Nguyen Tung Kim as the man in charge of finding and executing sound equity investments. To round out the team, well-known veteran Asia investor and author of the Gloom, Boom & Doom Report, Marc Faber, is a member of the firmÆs advisory committee. These guys have access to the top managers of Vietnam's major companies.
Investors are willing to bet that these folks can make sound investment decisions in a country that is awash with lots of money chasing too few opportunities. How hot is Vietnam? The stock market rose 144.5% last year. In January alone, net foreign buying on the Ho Chi Minh stock exchange was about $700 million, which is larger than the comparable figure in Taiwan. The market value of shares of the 107 companies traded on that exchange increased to $15.3 billion through February 15, up from about $500 million at the end of 2005.
As a result, it is going to take some careful investing to pick and choose the right company. But Indochina Capital Vietnam Holdings, which is structured as a closed-end investment company, isnÆt just investing in equities listed on the Ho Chi Minh stock exchange and over-the-counter stocks. It will also look at private equity and potentially some derivatives and debt securities. And it can also invest in non-Vietnamese companies which have a material portion of their business or assets in Vietnam.
There are already eight other Vietnam-focused funds or investment companies listed on LondonÆs Alternative Investment Market or in Dublin, but this is the first to list on LondonÆs main board. That should be an advantage given that it is a much more liquid market, allowing investors greater possibilities to trade in and out.
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