It looks likes 2011 is turning out to be a difficult year for fund management companies as the stock market and the economy are behaving like it is 2010 again. While a number of fund managers are concerned that their companies have been directly or indirectly affected by the unstable economy and the woeful stock market, Mr Andy Ho, Managing Director of VinaCapital, has another take. He believes that fund managers are by no means helpless as 2011 has been a good year for investment.
“Outside of Vietnam, the cost of capital is very cheap,” he said. “In Singapore, Hong Kong and Japan the cost of debt is less than 2 per cent. This means that strategic investors from these countries are willing to pay top money for assets in Vietnam. It is also a great time to invest because valuations are very low and terms very attractive.”
Timing is very important matter for fund managers and Mr Ho has his own vision in investing. “The beauty of investment is that it is never a bad year or a bad time, it is always a good time to enter, like now, or a good time to exit,” he said. “You just have to manage your timing and cash properly. Without cash, you cannot invest.” Such thinking is part of what has made Mr Ho one of the Asian fund industry’s most influential individuals and may also explain why VinaCapital continues to do well this year. “We have had great exits, like the sales of Halico, Vinacafe, a stake in Hoan My hospital, and more,” he said.
The beauty of investment
Although some call him a fund manager, Mr Ho likes to think of himself as an investor. The first reason is that being in that role offers him opportunities to learn about various business sectors. Another motivating factor is his wish to help businesses grow and to see them change and develop.
“The beauty of investment is that you can help a company grow their business, even without being an expert in that business sector, as we can leverage knowledge from industry experts in our extensive network to advise them on changes to improve their operations,” he said. It is also a great feeling to see an investment through to a successful exit, where investors can make a profit and the business feels they have made real progress.
Prior to joining VinaCapital as Head of Investment in 2007, Mr Ho spent a few years at Dell Computer Corporation, where he helped run the company’s venture investment arm. In 2004, as a Director of Investment at Prudential Vietnam, he looked after the Capital Market portfolio as well as Prudential’s mutual fund.
Although he has spent most of his career in investment, his position at VinaCapital requires slightly different skills than his previous posts. “At Dell we managed money from the corporation, and at Prudential we managed money raised by the sale of insurance products,” he explained. “At VinaCapital we have to raise money from the public and this involves learning new skills related to fundraising.”
Since becoming Managing Director of VinaCapital Mr Ho has promoted its growth by focusing on three important factors: customer relations, people management, and product management. Under his leadership VinaCapital grew its assets under management to over $2 billion before the global financial crisis in 2008, and today it manages assets of almost $1.8 billion.
Mr Ho’s responsibilities at VinaCapital are quite broad as he is also in charge of investment work in Private Equity, Capital Markets and Venture Capital Investment Groups. The investment team reports ideas, reviews and selections of investment directly to him and he is there to guide the investment team and keep them disciplined. He has developed a set of rules that serve as guidelines to help all members of the team think through all aspects of an investment.
Like many good managers, he insists that discipline and teamwork are key factors for success. “Stick to those principles and you should be okay,” he said. “Teamwork means understanding each other’s strengths and weaknesses and making the best use of them. And it also means getting all relevant team members to speak up on matters before a decision is made.”
VinaCapital has long paid greater attention to people management and Mr Ho trusts the capabilities of the investment team. “Investing is all about people and is what makes the difference in our success,” he said. “We have a very strong team of investment professionals at VinaCapital, probably the best in Indochina. They are very experienced and we compensate them well, but most importantly we have to hold on to them for the long run, and that means working well together.”
In talking about the challenges for the investment industry in general and for his position in particular, Mr Ho admits that managing other people’s money requires investors to be more careful, diligent and, most of all, ethical. He sees ethics as the most valuable standard that every investor is measured by. Instead of engaging in unethical activities, Mr Ho suggests that investors should be extremely strict in their operations. The investment professional, he says, must have the highest level of ethics when it comes to making and exiting an investment anywhere in the world.
Like all asset managers, VinaCapital has also had some investments that did not turn out well. Mistakes in investments, according to Mr Ho, can happen anywhere, especially when trust is placed in the wrong management team who defraud the investor. “In the past we invested in a subsidiary and, over time, realised that the CEO was allocating charges inappropriately to the subsidiary,” he explained. “Profits that should have been there did not materialise. The CEO would allocate profitable projects to his other subsidiaries, or engage services from his other subsidiaries and charge a very high fee to the business we invested in.”
Another common mistake in the industry, he continued, is making an undisciplined investment based on emotion or a recommendation from an influential person such as a friend or a family member. “Friends and family are not investment professionals. They make great friends and family, not great investment or financial advisors,” he smiled.
A lot can happen in the future but VinaCapital’s vision and future investment strategies toward Vietnam will remain the same. It will continue to make medium- and long-term investments in key areas that generate attractive returns. Casting his eyes over potential investment sectors, Mr Ho said that VinaCapital would set its sights on financial services, consumer products, healthcare and education.
As for the real estate sector, he predicts an ongoing trend of transformation of urban living space based on the demand for modern housing and shopping facilities. “So we’ve focused on investing in these assets, like townships and large-scale mixed-use developments, such as the Danang World Trade Center project,” he said. One thing that Mr Ho is certain of is that Vietnam will continue to develop and change quickly, and VinaCapital will continue to be at the forefront in bringing opportunities in Vietnam to investors around the world.
His leisure time is spent reading books, watching movies and playing with his son, though he admits that he doesn’t have a lot of free time. He is also a sports lover, especially tennis, swimming, biking and skiing.
And when asked about his advice for those who want to enter the investment field, the man who admits that a lot of mistakes, success and books have influenced his investment style, simply warned that investment is not sexy and exciting. “It takes a lot of research and detailed work, and an intimate understanding of financial statements, business operations, and the market and people,” he said. “People management is the most important skill for an investor to have in order to be successful.”