Vietnam Investment Funds Review of private equity exits

Exit methods
Exit methods

Stock exchange listings are certainly the most favoured method of achieving an exit for fund managers in Vietnam. They account for almost twice the number of exits compared to all other methods since 2003. Each of the other methods of achieving exists have generally remained relatively insignificant, other than for a few spikes in 2005 and 2006. In 2010 we saw an increase in the number of secondary sales (sales to other fund managers). Especially as new entrants sought to take a cautious path and invest in targets that had already been vetted and invested in by experienced fund managers. We also saw trade sales drop off completely in 2010. This presents fund managers with a challenge, as trade buyers traditionally make up a large portion of buyers for private equity exits in a global context. Listings will likely continue to be the preferred exit method for private equity investments in Vietnam. This is due to the relatively lower barriers to list and the less onerous compliance requirements for listed companies in Vietnam.

100%

Nim yt trn th trng chng khon

80%
60%

Bn li cho i tc chin lc Bn li cho cc nh u t khc Bn li cho c ng Thanh l khon u t Hnh thc khc

40%

20%

0% 2003 2004 2005 2006 2007 2008 2009 2010*

Length of time invested for each exit Survey data shows that the average length of time that the investment funds remain invested in a company prior to an exit (full or partial) has been trending upwards in Vietnam. The 2010 data indicates an average holding period of around four to five years. Over the full survey period the average length of time that investments have been held is three years. The data suggests that the length of time an investment is held is not significantly different between partial and full exits. It is often argued that investments take time to mature in Vietnam, supporting the relatively equal number of partial to full exits recorded. Partial exits, in this context, appear to be used to free up investment capital whilst the investment is still maturing. Based upon the large number of investments made in 2007, the next two years should result in a large number of investment exits by the fund managers.

Average length of time invested

80 70 60
months

50 40 30 20 10 0
2003 & prior

Average length of time invested (months) for each partial ex it Average length of time invested (months) for each ful exit

2004 2005 2006 2007 2008 2009 2010

YTD

Average length of time invested

Average length of
Average length of time

Year
2003 & prior

2004 2005 2006 2007 2008 2009

2010 (Nov)

time invested (months) for each partial exit 0 28.4 7.5 36.9 38.1 26.6 44.4 52.3

invested (months) for each full exit

73.0 2.0 47.9 51.8 33.6 45.7 37.8 65.5

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