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Dragon Capital exits three investments in 2010

Vietnam-focused fund manager Dragon Capital has exited three private equity holdings in 2010 worth USD60m.

In March, Dragon Capital sold its VP Bank stake at a 30 per cent premium to its carrying value. Dragon Capital invested in ten per cent of VP Bank in 1996.

A partial exit occurred in 2007 when bank valuations soared, and VP Bank shares hit 10x book. The balance of Dragon Capital’s stake was sold last March at a valuation of ca 2.5x book (versus the peer-group average of 1.2x). In total, the investment scored a 2.7x multiple and an IRR of 21 per cent.

In November, Dragon Capital completed a full exit from Landmark Apartment Building.

This investment was made during the Asian crisis as a distressed-asset joint venture deal. Dragon Capital bought out the 75 per cent stake of the developer, whose funding had dried up, and restructured all outstanding debts. It then changed the design and usage of the project from a hotel to a high-end serviced-apartment complex.

After ten years holding, Dragon Capital recently decided to sell the business via a selected-bidding process. This deal was executed in November with a transaction value of approximately USD15m, resulting in an exit multiple of over 7x and an IRR of ca 22 per cent over ten years.

Dragon Capital has also completed a partial exit from Vinamilk, a dairy products manufacturer. Dragon was involved very early in the privatisation process. Dragon was the first foreign investor in the company, followed by Fraser & Neave, a Singaporean food and beverage player.

Recently, Dragon Capital decided to make a partial exit from Vinamilk via an open auction to foreign investors. The exit tranche was about one per cent of the company and 12 per cent of Dragon Capital’s stake. The USD19m deal had an exit multiple of 5.1x and an IRR of 39 per cent over six years.

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