Brian Spence *
Brian Spence explains how his old and new homelands are increasingly converging in the investment sphere, particularly in renewable energy.
S&P Investments takes a genuinely global view as an M&A broker, and we naturally have strong links to the UK due to my having spent decades in the financial services sector before making Việt Nam my home back in 2017. What is surprising me now is how often those worlds converge, although perhaps not the driver behind this.
Việt Nam has of course been rising ever higher on the radars of investor globally off the back of years of strong GDP growth and a boom in both foreign and domestic investment encouraged by a series of moves to enhance the business environment.
Alongside a young and well-educated workforce, the country boasts a highly favourable geographical position that makes it an ideal manufacturing and trading hub (so much so that it is increasingly seen as a rival to China). The Government has showed remarkable commitment to fully leveraging these advantages on the global stage, through upping legal standards and entering trade treaties, while domestically entrepreneurialism is being encouraged to flourish.
The designer shopping centres springing up in cities across Việt Nam signal its growing affluence and the influx of international companies anxious to get a toehold selling into this booming market has been just as marked. In short, Việt Nam is drawing all manner of investors, but as an M&A and wealth management adviser, it is on the corporate side that my two worlds increasingly collide – and more and more within the green tech space.
UK investors piling in
My friends in finance back in the UK are often surprised to learn that British investment has been tracking up strongly and that at the end of 2018 the Ministry of Planning and Investment counted 351 UK-funded projects in play worth some US$3.6 billion. As such, UK companies represent a growing source of M&A deals in Việt Nam, this invariably being seen as the most prudent way for them to enter a market which is as esoteric as it is attractive.
Particularly eye-catching are Việt Nam’s moves to distinguish itself on the frontiers of the clean energy movement and there has been a very striking charge from the British on this front. For instance, over 30 renewable energy companies from the UK were thought to have met with public and private energy sector representatives at last year’s Low Carbon Energy Conference in Hà Nội.
UK companies interested in green energy will have been excited to learn that the governing council of the Global Infrastructure Facility recently gave the nod to a $1.5 million in funding allowing the World Bank to work with the Vietnamese Government Solar Pilot Auction Programme. This will address the country’s burgeoning appetite for energy and need to reduce emissions, by unlocking the power of the private sector to diversify the nation’s power supply and contribute to the Government’s ambitious target of putting 12 GW of solar energy onto the grid by 2030.
Rapid evolution ahead
Private-public financing is increasingly seen as a big part of the solution to Việt Nam’s energy challenge, and it is easy to anticipate that increased access for the private sector will also help drive pricing and regulatory reform. We can also expect the rise of more sophisticated financial products as investors both domestic and foreign being to see these efforts bear fruit. After all, a remarkably high proportion of investors all around the world are building Environmental, Social and Governance (ESG) or responsible investment principles into their investment strategies. A rapid, symbiotic maturation of both the energy and financial services markets in Việt Nam is afoot.
And of course, solar energy is just one part of the renewables story. Necessity is the mother of invention, and as a rising economy Việt Nam is arguably best placed push the green tech agenda to its furthest conclusion.
As a specialist international broker, we have been able to present UK companies with a wide range of compelling investment opportunities in Việt Nam and we look forward to a growing proportion being related to green energy initiatives. Generally, we have found that foreign investors are prepared to pay premium prices for any business that will give them an efficient entrance in the dynamic Vietnamese market and provide help navigating a business landscape which – though friendly – is evolving at a dizzying pace. This will be even more the case in the renewable energy sector.
It is great to see Việt Nam throwing its weight behind renewable energy and trying new approaches to tackle its energy issues. It is better still to see UK companies recognising the investment and M&A potential that represents. Here, the potential to do very well financially – as well as doing a lot of good environmentally – is proving very alluring indeed.
* Brian Spence is managing partner of S&P Investments. He has more than 35 years of experience in the UK financial services industry as an investment manager, financial planner and M&A specialist. He is a regular contributor to the UK financial press and has a deep understanding of the financial services community. Brian’s column will reflect on all the challenges and opportunities within the Vietnamese market, bringing a fresh perspective to today’s hottest issues. The columnist’s email address is firstname.lastname@example.org.