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IDG launches $120M IT venture capital fund in Vietnam

The U.S.-based International Data Group (IDA.XX) has launched a $120 million venture capital fund to invest in information technology businesses in Vietnam, company Chairman Patrick J. McGovern said Friday.

The unlisted fund, called IDG Ventures Vietnam, will invest $100 million in Vietnamese IT outsourcing firms, telecommunications and software producers, and $20 million in publishing of Vietnamese IT-focused magazines, McGovern said.

‘It’s time now for foreign investors to be in Vietnam – or the next China – because I see a very good aspect of human resources and government awareness for the development of the private sector,’ he said in a media briefing before ending a four-day trip to Vietnam.

‘All of IDG’s investment will be in equity, by which we expect returns of between 45% and 52% over a period of 10 years, compared with an average return on equity of 52% that IDG made in China for the last decade,’ he said.

IDG’s investment proportions in Vietnam will be 30% for telecom and wireless development, 25% for software, 15% for biotechnology and the rest in new material and other IT-related interests.

‘In biotech, for example, our investment will promote the use of IT products for health care and disease control in Vietnam,’ McGovern said.

IDG has selected about 40 local firms where it will put seed capital of between $500,000 and $4 million in several stages in the coming years.

‘We expect these firms will have an annual growth rate of 30% to 35% to the year 2010…and they will be listed in Hanoi’s stock exchange, which will be launched in the future,’ he said.

He said he was very encouraged by Vietnam’s announcement this week to open a second stock exchange in Hanoi before the end of this year, where stocks from small and medium-sized firms will be traded.

The country’s only stock market is in Ho Chi Minh City.

In publishing operations, IDG will set up several 50-50 joint ventures with government bodies to publish Vietnamese language magazines such as Computer World, Networking World, Telecoms World and Biological World, all of which will focus on IT content.

Communist Vietnam doesn’t allow private ownership of media. Foreigners can publish newspapers or magazines only through joint ventures with the government.

‘What we will publish here will also be the same as what we have been doing in China for the last 10 years…all are very successful in terms of sales and ad revenues,’ McGovern said.

For its local development, IDG has opened offices in Hanoi and Ho Chi Minh City, and another in San Francisco that has the task of attracting investment from U.S.-based Vietnamese.

To date, several foreign-owned investment funds have come to Vietnam, including the Vietnam Enterprise Investments Fund, the Mekong Enterprise Fund, the Vietnam Opportunities Fund and the Fanxipang Vietnam Fund. They have put money in a variety of investments, but none focus on the IT sector.

Reported by Phammuoi Nguyen