Reduction in the valuations of certain investments

RNS Number : 9435H

VinaCapital Vietnam Opportunity Fd.

29 November 2022

 

VinaCapital Vietnam Opportunity Fund Limited

 (the "Company" or "VOF")

 LEI Number: 2138007UD8FBBVAX9469

Reduction in the valuations of certain investments

In the light of the recent decline in the real estate market in Vietnam, the Board of VOF announces that it has reviewed the fair values of certain investments categorised by the Investment Manager as Public Equity with Private Terms and has concluded that the NAV of the Company should be reduced by $26.2 million as at 30 November 2022. This reduction will be reflected in the NAV with immediate effect.

VOF divides its private equity investments into two categories: traditional private equity where VOF typically holds a significant minority stake in an unquoted business which is expected to float on a Stock Exchange or to be sold to a trade buyer in the future; and "public equities with private terms" where VOF has invested in a financial instrument issued by a public company but which may or may not be quoted on a stock exchange. These instruments typically offer an attractive return but also incorporate protection against losses if the expected outcomes do not materialise.

The traditional private equity investments were last valued by KPMG, an external valuer, at 30 June 2022 and will next be valued by the Investment Manager using the same approach as the external valuer but with inputs updated, as at the half year end on 31 December 2022.

Each investment categorised as "public equity with private terms" is valued by the Investment Manager on a weekly basis according to the structure of each investment taking into account the share price of the issuer (if that has been rising) or the downside protection built into the investment if the share price has not performed as expected. In most cases the downside protection involves put options onto the sponsor at a fixed price at a point in the future. In many cases, VOF also holds assets which have been pledged by the sponsor and/or a guarantee from the sponsor as security for the instrument.

In the light of the issues being faced by the real estate sector in Vietnam, the Board asked the Investment Manager to review the valuations of the investments categorised as "public equity with private terms" focussing in particular on the creditworthiness of the various sponsors as counterparties for the put options and on the value of the assets held as security.

With some of these investments, the Investment Manager has concluded that the put options have fallen in value as the creditworthiness of the sponsor has reduced and in other cases, the value of the security held has reduced as share prices have declined. The Board has reviewed the Investment Manager's valuations and has concluded that the fair values of these investments should be reduced by a total of $26.2 million. This represents approximately 18% of the original NAV of these investments and 2.8% of the NAV of the Company prior to the write-downs.

It should be noted that this adjustment is solely in respect of the current Fair Value of these investments.  None of these instruments is in default and the maturity dates are some time in the future. The Investment Manager is working on the basis that these instruments will continue to perform and will pursue the downside protection if that turns out not to be the case.  These investments will continue to be valued by the Investment Manager weekly on the basis of the prevailing share prices of the underlying investments and the Investment Manager's continuing assessment of the values of the put options or the values of assets held as security.

Enquiries

Joel Weiden

Investment Manager - Investor Relations and Communications VinaCapital Investment Management Limited

T: [phone]

E: [e-mail]

Magdala Mullegadoo

Company Secretary / Administrator Aztec Financial Services (Guernsey) Limited

T: [phone]

E: [e-mail]

Edward Gascoigne-Pees

Public Relations Camarco

T: [phone]

E: [e-mail]

David Benda / Hugh Jonathan

Broker

Numis Securities Limited

T: [phone]

E: [e-mail]

David Harris

Marketing and Distribution (United Kingdom) Frostrow Capital LLP

T: [phone]

E: [e-mail]

Dion Di Miceli / Stuart Muress

Marketing and Investor Engagement (Global)

Barclays Bank PLC

T: [phone]

E: [e-mail]

1.  References to VOF or the Company in this announcement shall mean VinaCapital Vietnam Opportunity Fund Limited, a non-cellular company incorporated in the Bailiwick of Guernsey under The Companies (Guernsey) Law, 2008, with registered number 61765. It is authorised by the Guernsey Financial Services Commission (reference number 2268242) as a registered closed-ended investment scheme under The Protection of Investors (Bailiwick of Guernsey) Law, 1987 and in compliance with the Registered Collective Investment Scheme Rules, as amended.

2.  The registered office address of the Company is East Wing, Trafalgar Court, Les Banques, St Peter Port, Guernsey, Channel Islands, GY1 3PP.

3.  This announcement may contain inside information as stipulated under the Market Abuse Regulations (EU) NO. 596/2014 (MAR).

 

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