Dragon Capital Group, a Vietnam-based private equity fund management company, has made a partial exit from Vinamilk, the biggest dairy company in Vietnam.
Dragon Capital has realised part of the gains in its flagship holding with a 7x return.
“Vinamilk has performed exceptionally for both VEIL and VGF,” says VEIL portfolio manager Vu Huu Dien. “From an initial position of 10 per cent in both funds, Vinamilk has grew to over 33 per cent of VEIL and 40 per cent of VGF. Both funds have sold down several times, but Vinamik still accounts for over 15 per cent in both portfolios, vs just being 10 per cent in the Vietnam Index.”
Since privatization in 2004, Vinamilk’s net profit grew by 11x, and market capitalisation grew by more than 40x. To get exposure, late-coming foreigners had to go via auction and paid premiums of up to 20 per cent of prevailing market share.
Dragon Capital was the earliest foreign investor in Vinamilk. The fund manager was consulted by the company during the privatisation process.
The most recent exit tranche was about 1.1 per cent of the company and 6.5 per cent of VEIL’s, 10 per cent of VGF’s holdings. An earlier exit of USD69.3m was done in December 2013, through auction between foreign investors. This recent USD66m exit resulted in an IRR of 49 per cent over ten years.
