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Executive talk
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FPT gains a wealth of foreign experience
Update: 30-10-2006
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Texas Pacific Group (TPG) and Intel Capital last week pumped $36.5 million to acquire 10 per cent of Corporation for Financing and Promoting Technology (FPT), becoming the strategic partners of Vietnam’s leading IT firm. Timothy D. Dattels, managing director of TPG Newbridge, TPG's investment arm in Asia, explained the move to VIR's Trang Anh.
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“I prefer to be in a leading company as an investor and FPT surely has that advantage.”– Timothy D. Dattels |
Why does TPG invest in FPT?
Vietnam’s economy is growing at the world’s second highest rate after China. The IT sector, in particular, is booming. Ten years ago, when I came to Hanoi, it was hard to get an [internet] connection, today there are 13 million internet users. This company [FPT] is right at the heart of what is happening in the country and has excellent management and strong employee ownership. So we are excited about being a partner.
Do you see FPT’s leading position in Vietnam’s IT sector as a key factor behind your investment decision?
I think in an emerging market, the national champions do well, because they tend to attract the best and the brightest [in the] country and their involvement is very significant to this country’s growth. I prefer to be in a leading company as an investor and FPT surely has that advantage.
What do you expect FPT’s growth rate will be after receiving the two new strategic partners?
A number of people have asked me how quickly I think it is going to grow. FPT has grown at 70 per cent per annum in several years and I don’t think it will continue to grow at this pace. But I think it will have a very strong growth rate in the future, which is higher than the industry because it will be dominant due to its big market share. And the IT market grows at 25 per cent a year right now in Vietnam.
We have an idea on how it will grow. But I don’t want to make projections because it is not going to define what our term is and what the market does.
What will you do as an FPT’s strategic partner?
We can help make FPT become more attractive to overseas investors if FPT decides on a foreign [bourse] listing. Whether is does or does not is really up to the foreign investors to decide.
Could you say more specifically?
Firstly, my partner Vivek Paul will be a special advisor to Truong Gia Binh [FPT’s CEO] and management. Secondly, along with Intel, a lot of other connections we expect to put in the company’s portfolio.
And thirdly, we have a lot of experience with companies all over the world. We have different ideas on world standards of governance and reporting. Tactically and strategically we can help FPT grow its business but we are not running the company.
In which market would you prefer to recommend FPT to list shares?
It is really up to FPT. I like such Asian markets as Hong Kong and Singapore personally.
Does this deal signal the upcoming increase in US investments into Vietnam’s IT sector?
I think there is huge interest in Vietnam with foreign direct investment in Vietnam on a similar level to India. That is very big statement when you look at those economies. Our investment of $36.5 million is relatively small compared to the size of the economy.
What is important is this investment is in a Vietnamese-run, managed and owned organisation
To be perfectly honest, the signing of this deal was coincidental with Vietnam’s final preparatory stage to join WTO. WTO accession is a reason for the anticipated opening of IT business and the anticipated dramatic growth.
Another reason which attracted me, frankly, was when I sat down with Binh and [his] team, I thought I was in Silicon Valley. I can understand people who own their business. So as an investor, if I put in a dollar, our interests are alive that is something I can understand.
Do you plan to look at other companies?
We are so busy working on this. [We] haven’t spent much time [on it], but we like financial services, banking, insurance and product distribution.
It is really dependent upon the circumstances, but there are a lot of opportunities right now in Vietnam. The government has a very ambitious equitisation programme that we are following closely.
No. 785/October 30-November 5, 2006
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