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Warburg Pincus to invest over US$370 million in Techcombank
Nguyen Tung 09:07, 2018/03/13
Global private equity major Warburg Pincus has agreed to invest over US$370 million in Techcombank, marking the largest-ever private equity investment in Vietnam to date, announced Techcombank on March 12.
In a statement, the bank said the investment from Warburg is part of its equity-raising efforts to fund its expansion and further solidify its leading position in Vietnam.
Techcombank is one of the largest private sector joint stock commercial banks in Vietnam.
Techcombank is one of the largest private sector joint stock commercial banks in Vietnam.
The transaction, to be made through two separate legal entities managed by Warburg Pincus, will bring Warburg’s total commitment in the country to over $1 billion.
“Vietnam is one of the fastest-growing banking markets in Southeast Asia and Techcombank is well-positioned with its leading retail franchise and best-in-class management team with strong local and international banking experience,” said Jeffrey Perlman, Managing Director and Head of Southeast Asia at Warburg Pincus.
“We expect Techcombank to further consolidate its dominant position in Vietnam and become one of the leading banks in Southeast Asia.”
Established in 1993, Techcombank is one of the largest private sector joint stock commercial banks in Vietnam with total operating income and profit before tax as of 2017, and one of the most profitable banks in Asia, stated the Vietnamese lender. Moody’s also rated Techcombank one of the highest among Vietnamese private joint stock banks.
“The Vietnamese economy and the banking sector are experiencing tremendous growth right now. This year we celebrate our 25th Anniversary, amidst a market where the demand for banking services is sharply accelerating with increasing spending power in our population,” said Ho Hung Anh, Chairman of Techcombank.
“Techcombank is in an excellent position to serve this demand, and we look forward to working with Warburg Pincus to further consolidate and build upon our current financial strength.”
Earlier this month, the bank announced that it plans to list its shares on the Ho Chi Minh Stock Exchange (HoSE) this year and sell over 158 million treasury shares to foreign investors to raise at least US$162.74 million.
In 2017, Techcombank achieved total operating income of VND16.1 trillion and profit before tax of VND8.5 trillion (US$708 million and US$373 million, respectively), according to the bank’s financial statement. Techcombank had industry leading profitability in 2017 with return on average equity of 28.0% and return on average assets of 2.7%.
Warburg Pincus started investing in Southeast Asia in 2013 with Vietnam as its maiden market. Since then, the Private equity firm has invested in seven companies in the region, including Vincom Retail, Lodgis Hospitality, ARA Asset Management, Go-Jek, NWP Retail and Trax. 
The firm, with US$40 billion assets under management, invested $300 million in Vincom Retail, the largest shopping mall operator in the country which is also a subsidiary of domestic property giant Vingroup. Further, its highly successful $740-million listing on the Ho Chi Minh Stock Exchange last November was the largest-ever IPO in Vietnam.
Despite fastest growing banking markets, Vietnam’s banking penetration rate remains very low, at just over 30 percent according to 2017 figures, compared to other Southeast Asian countries including Indonesia (56%), Thailand (71%) and Malaysia (77%), thus offering a strong headroom for growth.
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