The Vietnam Opportunity Fund (VOF), which is managed by VinaCapital, for example, and Ba Huan JSC signed a cooperation contract on February 26.

Ba Huan is a leading poultry egg and meat producer in Vietnam. It holds 30 percent of pasteurized egg market, has high revenue growth rate of 15-30 percent and expects the revenue of over $90 million in 2018.

VOF decided to invest $32.5 million in Ba Huan and stated it might pour more capital into Ba Huan in the next 12 months.

However, big problems arose just after a short period of cooperation. Ba Huan, in its document to the Prime Minister, explained that VinaCapital set a high IRR, at 22 percent, which was three times higher than bank loan interest rates. 

In addition, the investment fund also set stiff punishments if Ba Huan could not gain the business results as negotiated.

If Ba Huan could not reach the business results, it would have to give back the investment capital with the interest rate of 22 percent per annum, or transfer at least 51 percent of Ba Huan shares to VinaCapital.

A lawyer commented that the contract has provisions that offer advantages to VinaCapital. No matter what Ba Huan’s business results are, the investment fund will not lose.

VinaCapital told the press that there was a misunderstanding between the two sides. It also affirmed that it strictly observed current laws and denied that it attempted to swallow Ba Huan.

However, VinaCapital still decided to terminate the cooperation.

To date, via its funds, including VOF, VInaland Fund (VNL), DFJ VinaCapital (DFJV), VinaCapital has invested in 170 businesses. But many investment deals eventually broke up. 

One of them was the deal between VinaCapital and Yen Viet JSC. In 2010, the two sides signed a cooperation contract which Yen Viet hoped would help expand its coverage in the retail market. 

The $20 million ‘marriage’ terminated after three years with the departure of Yen Viet’s owner.

Hoan My Hospital also joined hands with VinaCapital in hopes to get support in capital and business expansion in 2009. 

After one year, Hoan My had to sell the hospital to Fortis as it could not gain the business results as required. 

Meanwhile, VinaCapital received the profit, which was much higher than the initial investment capital.

Failing to gain business targets as negotiated between investment funds and businesses was also the reason behind other breakups, including ones between Indochina Capital and Vinamit, a dried fruit processor, and between Cassia Investments and The KAfe.

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