Target Information

EVN Finance Joint Stock Company (EVNFC) is a prominent financial institution based in Vietnam, established in September 2008 under the supervision of the State Bank of Vietnam (SBV). Initially owned by the state-run Electricity of Vietnam (EVN), the company was created to manage and regulate capital for EVN. Following EVN's complete divestment from EVNFC in 2020, the company became publicly listed on the Ho Chi Minh Stock Exchange (HOSE) in 2022. Presently, no shareholder holds more than 5% of the company's shares, with private individuals owning the majority. EVNFC operates as the second-largest Non-Bank Financial Institution (NBFI) in Vietnam by asset size and is equipped with a comprehensive financial services license, allowing it to engage in various activities such as capital mobilization, credit services, and other financial and banking activities.

As of December 2024, EVNFC's total Gross Loan Portfolio (GLP) amounts to USD 1.7 billion, serving approximately 274,000 active borrowers. With its headquarters located in Hanoi, the company maintains three branches in Hanoi, Ho Chi Minh City, and Da Nang. The portfolio predominantly consists of business loans (62% of GLP) and SME loans (33%), with a smaller section allocated to consumer loans (5%). Additionally, EVNFC is keen on bolstering its position within Vietnam's green finance sector by focusing on both green project financing and sustainable loans in the coming years.

Industry Overview in Vietnam

The financial services industry in Vietnam has shown substantial growth driven by the booming economy and increasing demand for financial products. As the country continues to develop, there is an ever-expanding need for diverse financial services catering to various sectors, especially the small and medium-sized enterprises (SMEs). The SME sector has been increasingly recognized as a vital contributor to the country’s economic expansion, representing a significant percentage of the workforce and GDP.

Historically, Vietnamese SMEs have struggled to access adequate financing due to the emphasis of traditional banks on larger corporations. This has resulted in a gap where SMEs often find themselves underserved by commercial banking institutions. Consequently, the rise of non-bank financial institutions like EVNFC has become crucial in fulfilling the financing needs of this segment, particularly in providing tailored financial solutions that are often overlooked by traditional banks.

Furthermore, the Vietnamese government has introduced several initiatives aimed at promoting the growth of SMEs. These initiatives often include financial support, tax incentives, and regulatory adjustments to foster a more conducive environment for businesses. The government’s focus on nurturing the SME sector helps reinforce the potential for growth and stability within Vietnam's economy.

With environmental sustainability becoming an increasingly critical element in business practices, the demand for green finance has gained momentum in Vietnam. Institutions are slowly transitioning to incorporate green financing solutions, providing loans for eco-friendly projects such as renewable energy, which aligns with both local and global sustainability goals.

Rationale Behind the Deal

The proposed investment by the DGGF to extend an $8 million loan to EVNFC is strategically aligned with the goal of enhancing financing accessibility for women-led SMEs in Vietnam. By earmarking this funding specifically for loans up to $1.5 million for female entrepreneurs, EVNFC demonstrates its commitment to bridging financial gaps that exist for marginalized sectors. This initiative addresses not only a pressing financial need but also contributes to gender equality and empowerment within the business landscape of Vietnam.

As the SME segment has traditionally been neglected by commercial banks, the DGGF’s support can catalyze EVNFC’s efforts to expand its portfolio with a focus on women-led businesses, thereby fostering greater economic participation. Given the significant portion of the customer base represented by women at EVNFC, the partnership has the potential to positively impact both the financial and social fabric of Vietnamese society.

Investor Information

The DGGF, or the Dutch Good Growth Fund, aims to promote sustainable economic development by supporting local businesses in emerging markets. Their investment strategy focuses on financing small and medium-sized enterprises that can drive growth while adhering to environmental, social, and governance (ESG) standards. The DGGF's commitment to gender inclusivity and SME development directly aligns with the envisioned impact of the investment in EVNFC.

Through its initiative, the DGGF seeks to mobilize resources that empower local financial institutions like EVNFC by providing them with the necessary capital to support their lending activities. This fosters a robust local financial ecosystem that enables businesses to thrive, particularly in sectors that play a significant role in social and economic development.

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The investment in EVNFC by the DGGF can be considered a commendable move, especially given the focus on enhancing financial inclusion for women-led SMEs. By specifically designating funds for female entrepreneurs, this initiative not only fills a crucial financing gap but also encourages diversity in the business sector. As traditional banks often overlook these segments, EVNFC’s approach of targeting underserved markets presents a unique opportunity for impactful growth and returns.

Moreover, EVNFC is well-positioned within the financial landscape of Vietnam, having already established itself as a major player in the NBFI space. The anticipated financial returns from this investment appear optimistic, given that the organization has laid down plans to expand its loan portfolio to cater to a demographic that is ripe for development. Additionally, the company’s commitment to integrating ESG criteria into its operations showcases an alignment with contemporary investment philosophies, which could attract further investor interest.

However, successful implementation and monitoring of the funded projects will be crucial. As the Vietnamese economy navigates its growth trajectory, external factors such as economic shifts and market volatility could influence the success of the investments. Therefore, vigilant oversight and risk management will be key to achieving the desired outcomes for both EVNFC and its beneficiaries.

In conclusion, the DGGF’s investment in EVNFC can be regarded as a strategic and socially responsible venture. It has the potential to deliver significant impact while yielding economic returns, thus creating a harmonious balance between profitability and social responsibility in Vietnam's evolving financial landscape.

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