Investor mood remains gloomy: survey

Investor mood remains gloomy: survey

Private-equity investors' negative sentiments about the next 12 months has risen about 100 per cent over survey results in the second quarter, according to auditing and consulting firm Grant Thornton.

The survey showed that the results were at about the same level of the 2011 fourth quarter, which at the time was the most pessimistic outlook of the last eight surveys conducted by the company.

The Grant Thornton Private Equity in Viet Nam – Investment Sentiment and Outlook survey, carried out in October and released yesterday, showed that investment attractiveness, as a result of the negative sentiment about the economy, dropped by half from 56 per cent in the second quarter of this year to 27 per cent in the fourth quarter.

However, despite the negative outlook, there was a small uplift in the increasing allocation of investments to Viet Nam by 41 per cent by all respondents.

However, 44 per cent of investment-fund respondents believed there would be "no change" in their portfolio in Viet Nam in the next 12 months. Twenty-five per cent of those respondents said they would decrease accounts while 31 per cent said they would increase their investments.

Secondary buyouts were no longer the most expected source of deals, dropping by 19 per cent, compared with the second quarter.

Private/family owners were considered the biggest source of deals by 32 per cent of respondents. Corporate divestments increased more than 100 per cent, reaching 31 per cent.

Healthcare and pharmaceuticals as a sector was still considered to be the most attractive industry to invest in, with 53 per cent of the respondents saying so.

In comparison with the previous survey, retail surpassed education and agriculture to be the second most favoured industry with 42 per cent of respondents.

The healthcare and pharmaceutical industry was selected as the most favoured industry in Grant Thornton's two surveys this year.

This is the first time the survey asked participants for their experiences on issues that caused deals to fail.

Differences in valuation expectation were seen by 55 per cent of respondents as the most common issue that could break deals.

In addition, changes in terms of deal agreements were a common factor that could break deals, ranked second with 50 per cent of respondents.

The survey found a movement in the expectation of private-equity investors about the length of time they plan to stay invested in Vietnamese companies, with fewer of them planning to stay a shorter period (one to three years) and more of them expected to invest for a longer period (more than five years).

The report also presents other information that concerns private-equity investors in Viet Nam, such as investment allocation, investment obstacles, important drivers of value growth, level of hands-on involvement expectation, and level of exit multiples and key factors to be considered.

The bi-annual report analyses were based on the opinions of decision-makers based in Viet Nam or those who have a significant focus on the country

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