Index-Asia & Pioneer International Consulting sign a partnership to help foreign and Vietnamese companies in their development strategy in the power & manufacturing sectors – May 2019
Vietnam’s power and manufacturing sectors currently benefit from a conducive environment with a strong economy growing at an annual average of 6% of GDP over the last 10 years, cheap electricity prices (USD0.076 per kWh vs. 0.117 in Thailand or 0.086 in China) coupled with an ambitious renewable energy plan, and cheap and increasingly productive labor costs (c. 60% cheaper than in China). In addition, Vietnam has strongly developed its commercial network and is today leading in ASEAN as the country with the largest number of free trade agreements, whilst benefiting from the positive side effects of the US-China trade war. As a result, FDI has increased significantly from c. USD2bn in 2006 to c. USD14bn in 2017, a 7x factor representing a normalized annual growth of c. 30%.
However, being successful in Vietnam is not as easy as it sounds – key challenges for enterprises include access to capital, optimal structuring (from international sources), implementing the right strategy to manage risks and delays (heavy bureaucracy & complexity of national laws), and finding reliable business partners. For investors, the issues lie in identifying the right targets, understanding local regulation and its constraints, conducting appropriate due diligence (as transparency is a variable concept), and monitoring the deployment of capital in and out of the country.
Recognizing the challenges investors face in accessing and expanding within the Vietnamese market, Index-Asia, a Hong Kong-registered company, and Pioneer International Consulting (“PIC”), a Singapore-registered company, are partnering through a joint venture in Vietnam (PIC-Index Asia) to provide local and foreign companies with (i) best-in-class advisory services (project finance, M&A, divestment, fundraising, country & market research, strategic advisory, legal & regulatory structuring, etc.), (ii) privileged access to information on the Vietnamese and Asia-Pacific markets (iii) access to an extensive network of international investors, and (iv) highly effective transaction execution. Together, Index-Asia and PIC have a combined work experience across ASEAN and Europe from top international institutions (HSBC, Clifford Chance, McKinsey, VILAF), with over 25 years of experience locally in Vietnam.
The key objective of the partnership between Index-Asia and PIC is to transform clients in Vietnam – be they SMEs, family-owned businesses, large corporates or energy project developers – into professionally managed companies and to deliver tailor-made transactions that meet both the needs of our clients and the expectations of international investors and corporates. The latter will also get the necessary support in target identification, due diligence services and post-investment financial and operational monitoring.
Phong Tran, Chairman at PIC & Denzel Eades, Managing Director at PIC recently agreed over a panel discussion on “Financing renewable energy projects in Vietnam” taking place in Hong Kong that ”with renewable targets for wind and solar of 18GW by 2030 and the government implementing a comprehensive policy programme to develop the renewable sector there is considerable opportunity for overseas investors seeking to access the market and to partner with local firms on project development”
Christophe Péron, Director at Index-Asia, explains: “After more than 4 years in Hong Kong and Manila, I am still struck by the potential of the Vietnamese economy and the dynamism of local companies, especially in the power and manufacturing sectors. Partnering with PIC will make us more relevant to our clients by combining complementary expertise (project finance, M&A, legal, project management, strategic advisory, etc.) and ultimately making them attractive for global capital markets”.
Through this partnership, PIC and Index-Asia hope to enlarge their service offering and consolidate their network across the region. “If we manage to work on well-designed cross-border operations and attract even more FDIs here, this would pave the way for the strengthening of the Vietnamese economic ecosystem, while striking the balance between more integration to global trade and less vulnerability to a global downturn.” concludes Julien Curtet, Director at Index-Asia.
Denzel Eades and Phong Tran are based in Hanoi, while Christophe Péron and Julien Curtet are in Ho Chi Minh City.