In the first partnership of its kind in the communist-ruled country, Morgan Stanley and the State Capital Investment Corporation said on Monday they will operate a joint venture to provide investment banking services such as merger advisory services, underwriting and trading of stocks and bonds, and making principal investments.
The Hanoi-based venture, which is subject to regulatory approval, is expected to begin operations in October this year with about 20 staff. A person familiar with the situation said Morgan Stanley would appoint the joint venture’s chief executive, while SCIC would name the firm’s chairman. No financial terms were disclosed.
Global investment banks, including Credit Suisse, Merrill Lynch and Deutsche Bank, have expanded their operations in Vietnam in the past 12 months, attracted by the booming economy and the potential of Asia’s newest stock market. So far, these operations largely cover the acquisition of stock market trading licences or co-operation agreements to assist in Vietnam’s “equitisation” programme, which is boosting the number of listed companies – from 38 in January 2006 to 195 in last week; market capitalisation of these companies, meanwhile, increased from $400m to $22bn over the same period.
Securing a partnership with SCIC is regarded as a coup for Morgan Stanley, as the government agency was created in 2005 to take capital ownership of Vietnam’s 5,000-plus state-run enterprises, accounting for about 70 per cent of the country’s tax revenues. Dominic Scriven, director of Dragon Capital, a Vietnam-based fund manager, said the first such tie-up between a global player and a major local entity could spur many similar ventures, “but finding someone as large as SCIC will prove difficult.”