GIC signs MOU to buy 7.73% stake in Vietnam's largest bank

SINGAPORE - Singapore's sovereign wealth fund GIC on Monday signed an memorandum of understanding with the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) - Vietnam's largest bank by market capitalisation - to acquire a 7.73 per cent stake in the latter on a fully enlarged basis.

The deal, if approved by the relevant authorities, will see GIC purchasing 305.8 million new shares in Vietcombank for an undisclosed sum, as part of Vietcombank's private placement of 359.8 million new shares.

It will also mark GIC's first significant direct investment in a commercial bank in Vietnam.

The equity investment, expected to be completed by the fourth quarter of this year, will increase Vietcombank's charter capital and help the bank prepare for the implementation of BASEL II as well as maintain its leading position in the Vietnamese banking sector.

GIC will also offer Vietcombank technical assistance and support.

"This investment reflects our confidence in Vietnam's long-term growth potential. We believe with Vietcombank's strong management team and market positioning, the bank will be able to capitalise on the strong growth trajectory of the Vietnam banking industry," said Mr Amit Kunal, head of direct investments group for Southeast Asia, Private Equity & Infrastructure, at GIC.

"GIC's strong reputation and experience will provide Vietcombank the support it needs to achieve its financial and business goals, both locally and internationally. In return, our market leadership and strong growth prospects offer GIC potential upside in its investment in Vietcombank," said Mr Nghiem Xuan Thanh, chairman of Vietcombank Board of directors.

Credit Suisse acted as placement agent and financial advisor to Vietcombank on the transaction.