Warburg Pincus to pump over $370m in Techcombank

Tuesday, Mar 13, 2018 08:58

Techcombank tranferred all of its capital at its subsidiary TechcomFinance to South Korean conglomerate Lotte Group’s credit card arm, Lotte Card. — VNS Photo

Viet Nam Technological and Commercial Joint Stock Bank (Techcombank) announced on Monday that two separate legal entities managed by Warburg Pincus would invest over US$370 million in the bank.

The investment will be subject to regulatory approvals.

Warburg Pincus is a leading global private equity firm focused on growth investing. The investment is part of Techcombank’s equity raising effort to provide growth capital to fund its expansion and further solidify its leading position in Viet Nam.

As the pre-eminent private equity investor in Viet Nam, this transaction of Warburg Pincus represents the largest-ever private equity investment in the country and brings Warburg Pincus’ total investment in Viet Nam to over $1 billion.

Techcombank, established in 1993, is one of the largest private sector banks in Viet Nam in terms of total operating income and pre-tax profit as of 2017. Moody’s rated the bank as one of the highest among Vietnamese private joint stock banks, with a rating of B2/positive; S&P awarded the bank a credit rating at the same level as the sovereign.

Nguyen Le Quoc Anh, CEO of Techcombank, said: “The Vietnamese market is at an inflection point. 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 be the leading bank in the region within the next decade.”

Viet Nam’s banking penetration rate remains quite low at just over 30 per cent, according to 2017 figures, compared to other Southeast Asian countries, including Indonesia (56 per cent), Thailand (71 per cent) and Malaysia (77 per cent). This provides a strong headroom for growth. While nascent, the Vietnamese consumer lending sector is rapidly emerging, and total outstanding consumer loans have tripled between 2013 and 2016 as the affluent class actively seeks products such as mortgages, auto loans and credit cards.

Jeffrey Perlman, managing director and head of Southeast Asia at Warburg Pincus, said: “The investment in Techcombank marks our continued commitment and strong belief in the long-term prospects for Viet Nam. Viet Nam is one of the fastest growing banking markets in Southeast Asia, and the bank is well positioned with its leading retail franchise and best-in-class management team with strong local and international banking experience. We expect Techcombank to further consolidate its dominant position in Viet Nam and become one of the leading banks in Southeast Asia.”

Saurabh Agarwal, Managing Director of Warburg Pincus, said the Vietnamese banking sector was highly under penetrated and had a strong potential for outsized growth.

Warburg Pincus started investing in Southeast Asia in 2013 with Viet Nam as its maiden market. Since then, it has invested in seven companies in the region, including Vincom Retail, Lodgis Hospitality, BW Industrial Development Joint Stock Company, ARA Asset Management, Go-Jek, NWP Retail and Trax.

Techcombank, Lotte Card complete takeover

Techcombank on the same day tranferred all of its capital at its subsidiary TechcomFinance to South Korean conglomerate Lotte Group’s credit card arm, Lotte Card.

In the third quarter of 2017, State Bank of Viet Nam passed the deal.

The deal was part of Techcombank’s plan to focus its strength on key businesses.

TechcomFinance, which has a charter capital of VND600 billion, was set up in 2015 after Techcombank acquired 100 per cent stake in Viet Nam Chemical Finance JSC, a subsidiary of Viet Nam National Chemical Group, during the group’s restructuring process.

According to TechcomFinance’s financial report of 2017, its total revenue was VND28.7 billion, while its total expenditure was VND7.1 billion. Its pre-tax profit reached VND22.5 billion last year.

Lotte Card, founded in December 2002, provides financial services such as cash-lending credit cards and instalment payment services. — VNS

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