Investment Philosophy

VCBF’s AI team follows the investment philosophy of fundamental growth. Its funds’ mandates are to invest in companies with proven track record and growth prospects, strong competitive advantages, good management and corporate governance, where capital injection and business improvement would create values in the medium to long term.

In evaluating prospective investments, the AI team generally focuses on the following four most important criteria:

Competitive Advantage

A target company’s business should have clear competitive advantages and be positioned for market leadership. In each attractive sector, the AI team seeks to identify companies that either have built up or are making progress in establishing good business models that are able to help them to improve their competitive advantages and margins in the long term. The competitive advantages of target companies are assessed in the light of having neither Government protection nor special policy treatment.

Strong and Cooperative Management

The AI team believes that the combination of the management’s competency and its willingness to cooperate with investors plays a pivotal role in the success of any investment. Consequently rigorous due diligence is conducted on the management of the target investees.

Value Creation in Medium to Long Term

The investment and cash injection to the company should lead to an improvement of its business and increase the value of the business in the medium to long term, which paves the way for a successful exit of the fund involved.

Risk Mitigation Focus

Risks are assessed through extensive due diligence and mitigated through customized deal structuring within the possibilities of local legislation. The AI team works closely with legal counsel to customize investment structures to minimize investment risks while preserving upside potential. In addition, the AI team aims to negotiate contractual protections and rights as part of the investment structures. These rights can include:

  • Right to at least one board seat where appropriate, which can enable better monitoring of the investment and direct involvement in the decision making process of the investee companies; and
  • Traditional tag-along and drag-along rights, rights of first refusal and other rights consistent with direct equity investing.
Sector Preferences

VCBF’s AI Team is currently looking to invest in those sectors that it believes are fundamental to the growth of Vietnam’s economy over the next several years. Typically these sectors fulfill the following criteria:

  • Fundamental growth prospects of the sectors are driven by either (i) strong and growing domestic consumption resulting from Vietnam’s large and young population and rising disposable incomes, or (ii) competitive advantages in export markets resulting from benefits of its labor force, favorable geographical and climate conditions;
  • The productivity and efficiency of the sectors can be improved by applying more sophisticated technology and organized marketing channels, which will, in turn, support and sustain the growth of the sectors; and
  • The existing legislation supports the participation of the private sector in the sectors.
back to top