Techcombank to receive $370-million investment from Warburg Pincus
Following the reopening of its the foreign ownership limit (FOL) to 8.54 per cent the week before, Techcombank (OTC: TCB) announced today that global private equity firm Warburg Pincus will invest over $370 million into the bank, subject to local regulatory approval.
The investment is part of Techcombank’s effort to raise equity to fund TCB’s expansion and enable it to further solidify its leading position in Vietnam. As the pre-eminent private equity investor in Vietnam, this transaction—to be managed by two separate legal entities under Warburg Pincus—will represent the largest-ever private equity investment in Vietnam and brings Warburg Pincus’ total commitment in the country to over $1 billion.
Managing director of Warburg Pincus Saurabh Agarwal noted, “The Vietnamese banking sector is highly under-penetrated with strong potential for outd growth. With a strong balance sheet and superior service offerings, TCB is well positioned to capitalise on this opportunity and gain a larger share of the market. We look forward to leveraging our deep expertise in the financial services sector to support TCB’s long-term growth.”
Ho Hung Anh, chairman of Techcombank, said, “TCB is in an excellent position to serve this demand, and we look forward to working with Warburg Pincus to further consolidate and build upon our current financial strength.”
“We are delighted to welcome Warburg Pincus as our partner and we look forward to working with them to pursue new high growth opportunities and further our aim to become the leading bank in the region within the next decade,” said Nguyen Le Quoc Anh, CEO of Techcombank.
According to Jeffrey Perlman, managing director and head of Southeast Asia at Warburg Pincus, Vietnam is one of the fastest growing banking markets in Southeast Asia and TCB is well positioned with its leading retail franchise and best-in-class management team with strong local and international banking experience. “We expect TCB to further consolidate its dominant position in Vietnam and become one of the leading banks in Southeast Asia.”
“The investment into TCB marks our continued commitment and strong belief in the long-term prospects of Vietnam,” Perlman added.
In 2017, TCB achieved a total operating income of VND16.1 trillion and pre-tax profit of VND8.5 trillion ($708 and $373 million, respectively, using the VND/USD exchange rate of 22,698 as of December 31, 2017).
TCB had industry-leading profitability in 2017 with a 28 per cent return on average equity and 2.7 per cent return on average assets. Warburg Pincus made its first investment in Southeast Asia in 2013 with Vietnam as its maiden market.
Since then, Warburg Pincus has invested in seven companies in the region, including Vincom Retail, Lodgis Hospitality, BW Industrial Development JSC, ARA Asset Management, Go-Jek, NWP Retail, and Trax.
Vincom Retail, a joint venture retail platform established between Vingroup and Warburg Pincus in 2013, has grown into the largest shopping mall developer and operator in Vietnam. Its highly successful $740-million listing on the Ho Chi Minh City Stock Exchange last November was the largest-ever listing in Vietnam.