Luxembourg infrastructure fund for Vietnam to deploy capital for road, port, industrial, and airport projects
Tecco Group and PHI Luxembourg Development SA, a subsidiary of PHI Group, have agreed to launch the first ever Luxembourg-based infrastructure fund for Vietnam.
Besides supporting transport infrastructure, Tecco expects to use the PHILUX Infrastructure Fund for a number of port, industrial zone cluster, and airport projects.
Tecco works primarily in the fields of construction investment for residential real estate, resorts, water exploitation, hydroelectricity and services such as travel and tourism.
PHI Group focuses on mergers and acquisitions and invests in select industries and special situations that may substantially enhance shareholder value. Its wholly owned subsidiary, PHILUX Capital Advisors, provides M&A consulting services and assists companies to go public and access international capital markets, while also serving as the investment advisor to Luxembourg-based PHILUX Global Funds
Tecco will cooperate with PHILUX Infrastructure Fund to capitalize on the huge potential of the infrastructure construction market in Vietnam. Tecco has been involved in more than 60 projects across 18 provinces and cities nationwide, from Lao Cai in the north to Kien Giang in the south of Vietnam.
As one of the fastest growing economies in ASEAN, Vietnam needs more foreign financial investment and technical assistance to narrow its infrastructure gap. According to the Global Infrastructure Outlook, Vietnam requires an investment of US$605 billion to meet 83% of its infrastructure goals by 2040. Among the sectors that have been given top priority are urban transportation, road & rail and port infrastructure.
Currently, just 20% of the country’s national roads are paved, and a recently approved plan to build the North-South high-speed railway, which allows passengers to travel between capital Hanoi and Ho Chi Minh City in about eight hours, will cost about US$26 billion.
The Vietnamese government is under pressure to maintain economic growth, especially in view of the Covid-19 pandemic. Vu sees the launch of the infrastructure fund as very timely amid decreasing Official Development Assistance (ODA) financing, the failure or negative consequences of BOT and PPP models, and bottlenecks in public finance funding.
The rising population in major cities in recent years has strained and exceeded capacity of existing connectivity networks and utilities systems. With 50% of Vietnam’s population soon expected to be living in cities, Hanoi and Ho Chi Minh are building rapid transit systems exceeding US$22 billion in the hope of reducing private vehicle ownership and improving air quality.
Various expressway projects are being planned or underway to improve connectivity within major cities. Urban utilities are also being developed and upgraded. There are 44 planned PPP projects with total investment value worth up to US$ 120 billion in the road and power sectors.
PHILUX Global Funds SCA, SICAV-RAIF is a Luxembourg-based bank fund with multiple sub-fund compartments for investment in real estate, infrastructure, renewable energy and healthcare.