Warburg Pincus joins Vietnamese logistics and property market.
"With the transformative shift of the manufacturing base from markets like China to Vietnam as well as with the rapid rise of domestic consumption, the logistics and industrial real estate market in Vietnam is in the "early innings" and at an inflection point for outsized growth," said Jeffrey Perlman, Managing Director and Head of Southeast Asia of Warburg Pincus, in a statement.
"We are excited to partner with Becamex to leverage their unrivaled local sector knowledge and experience to build the leading platform in Vietnam," he added.
Warburg Pincus was one of the first private equity firms to recognize the need to transform the logistics value chain on the back of the rise of e-commerce nearly a decade ago and has invested in 28 companies along all high-growth segments of the value chain.
Vietnam is one of the maiden markets as Warburg Pincus only started investing in Southeast Asia in 2013. The firm with US$40 billion assets under management invested US$300 million in Vincom Retail, the largest shopping mall operator which is also a subsidiary of domestic property giant Vingroup.
Its highly successful US$740-million listing on the Ho Chi Minh City Stock Exchange last November was the largest-ever IPO in Vietnam. Warburg Pincus also linked up with Vietnam's VinaCapital to invest up to US$300 million in a hotel venture Lodgis Hospitality in November 2016.
As the firm is taking interest in Vietnam, it is expected to capitalize on the growing demand for warehouses and manufacturing space in the 96 million country with an estimated GDP growth rate of 6.8% in 2017.
Vietnam's manufacturing and processing sector accounted for over 40% of the country's foreign direct investment last year, which surged to a record high of US$36 billion overall, according to the General Statistics Office.
Becamex IDC, established in 1976, is the provincial infrastructure investment arm of Binh Duong, a hotspot for foreign-invested businesses. The company is Vietnam's leading industrial park and township developer, having interest in 23 subsidiaries and affiliates. It is investing and managing six industrial parks in its home province with a total area of about 13,000 hectares (32,100 acres), according to its website.
Becamex and Sembcorp partnered up to form the Vietnam Singapore Industrial Park (VSIP) platform in 1996, which has chalked up over US$10 billion of investments to date.
The industrial developer also partnered up with Singapore's Temasek to operate hospital and healthcare, education, retail and hospitality, telecommunications, startup incubators, and public transportation services.