SINGAPORE'S sovereign wealth fund GIC is looking to place its first significant direct investment in a commercial bank in Vietnam. It aims to acquire a 7.73 per cent stake on a fully enlarged basis in Vietcombank, Vietnam's largest bank by market capitalisation.
Details of this were revealed at the signing of a memorandum of agreement on Monday held during the Singapore-Vietnam Business Forum.
It is proposed that GIC will purchase 305,810,895 new shares in Vietcombank. This is part of the bank's private placement of 359,777,745 new shares.
Terms and conditions of the transaction are subject to the relevant regulatory authorities' approvals. The transaction is expected to be completed by the fourth quarter of 2016.
The equity investment by GIC will increase Vietcombank's charter capital and help the bank prepare for the implementation of BASEL II, said both parties in a release issued at the signing ceremony. It can also maintain the bank's leading position in the country's banking sector.
"This investment reflects our confidence in Vietnam's long-term growth potential. We believe with Vietcombank's strong management team and market positioning, the bank will be able to capitalise on the strong growth trajectory of the Vietnam banking industry," said Amit Kunal, head of GIC's direct investments group for South-east Asia in private equity and infrastructure.
Credit Suisse acted as placement agent and financial adviser to Vietcombank on the transaction.
The business forum is held in conjunction with Vietnam President Tran Dai Quang's state visit to Singapore. Mr Quang will be attending a state banquet held in his honour by Singapore President Tony Tan after the forum. He will return to Vietnam on Tuesday.