"Funds to Be Launched in 2011 Should Be Successful in General"

Absolutely. It’s a very fragmented and unpenetrated market. You have these retail chains that have a very organised and systematic cookie-cutter approach to opening new stores and they have centralised functions that make it very easy to launch satellite stores. Once companies like that penetrate Ho Chi Minh City and Hanoi, they spread, province by province, from north to south. The consumer space is definitely the biggest for us and that’s broadly divided between retail and restaurants. Those sectors are growing somewhere in the region of 20 per cent a year and companies in those sectors benefit from the development of modern, organised trade.

The most attractive reasons to invest in Vietnam presently are the low valuations from a P/E ratio perspective, combined with the fast net profit growth rate of some companies. Some of the fastest growing companies are involved in consumer driven businesses, which is the sector on which we focus. However, I believe that successful investing in Vietnam is not dependent so much on choosing the right sector, but rather in choosing to invest in the best management teams.

 

Vietnamese companies are all different. Usually it’s the best managed company in each sector that is leading that sector. The weakest companies normally blame the circumstances and the market environment, whereas the most successful companies take responsibility to build an excellent team that can ensure the companies achieve attractive growth in net profit. However, one common gap in many Vietnamese companies is that they are not sufficiently tracking Key Performance Indicators (KPIs) on a regular basis and therefore they make management decisions by instinct or guessing rather than managing based on facts. However, we’ve seen that companies that are more fact-based tend to be a lot more successful.

Leadership starts with having a big vision, something bigger than what is easy or predicable, and which is meaningful to the whole group of people who are following the leader. The most successful leaders take a stand that something big is possible, and then empower their team to achieve that big possibility, even when there are others who think it isn’t possible or are resisting it.

 

It’s best to be making investments at a time of capital scarcity, and selling investments at a time of capital excess. 2008-2011 is a good time to be deploying capital in Vietnam because valuations are low and competition for deals is low. However, eventually more capital will come flooding back into the market and push up company valuations, similar to what happened in 2006 and 2007. So I think the timing is still good for raising a fund in 2011. I believe that within 3-4 years Vietnam’s markets will be at new highs, meaning that funds launched in 2011 should be successful in general.

2011 will be our best year ever. Starting in 2009 we implemented a system for partnering with our investee companies called Vision Driven Investing. The more we practice it, the more effective we become at applying it. Vision Driven Investing is having an increasingly positive impact with our investee companies, resulting in many of those companies achieving rapid net profit growth in recent years. But we expect 2011 to be even stronger as many of our companies have big expansion plans for 2011.