Stock Market

VEIL Fund’s 30% Stake Acquisition: Minimal Impact on Vietnam’s Stock Market, KBSV Research Finds

According to KB Securities Vietnam’s Research Division (KBSV Research), the scenario where Dragon Capital’s billion-dollar fund executes all three buyback tranches, totaling up to 30% of the charter capital, could result in a cumulative capital withdrawal of up to VND 14.3 trillion. However, the impact on Vietnam’s stock market dynamics is expected to remain relatively moderate.

Administrator

18 December, 2025

Recently, VEIL—a billion-dollar fund under Dragon Capital—announced a share buyback plan to meet shareholder liquidity needs through a Tender Offer mechanism. The current offer is capped at 10% of issued common shares, with two more rounds expected within the next 12 months, each up to 10%, potentially totaling 30% of the fund’s equity.

Exit options include: (1) Cash Exit Option—receive cash at the offer price (3% discount to NAV); (2) Exchange Option—convert to Vietnam Equity (UCITS) Fund (VEF), requiring a minimum subscription of 100,000 GBP and available only in eligible jurisdictions; (3) In Specie Option—receive the underlying portfolio directly, restricted to professional investors or qualified partners.

According to KBSV Research, several factors drive this move. First, shareholder pressure: at the June 2025 AGM, over 20% of votes supported fund termination, prompting the board to offer liquidity solutions. Second, underwhelming performance: VEIL’s NAV rose just 21% year-to-date through November 2025, lagging the VN-Index’s 31% gain.

Third, the fund’s London-listed shares often trade at a 15% discount to NAV, inflicting losses on direct sellers. The 3% discount offer is seen as optimal for profit realization. Fourth, macroeconomic risks and FDI outflows: foreign capital exited Vietnam by over $5 billion in 2025, with Trade War 2.0 threats potentially weakening Vietnam’s FDI appeal amid volatile tariff news.

Fifth, currency risk: holding VND-denominated assets while reporting in USD/GBP exposes foreign investors to significant exchange rate risk, especially with a strengthening USD/GBP.

KBSV Research estimates the total withdrawal could reach 14.3 trillion VND ($545 million) if all three rounds are executed—substantial compared to 2024’s $3.7 billion and 2025’s $5 billion net outflows (11-15% of two-year totals). However, relative to overall market volume, particularly with foreign transactions at just 9% year-to-date, the impact is limited.

This marks Dragon Capital’s third such move in two years (8.1% in 2024, 12.8% in 2025), yet each round’s volume equates to 1-3 days of foreign selling during peak outflow periods, lacking market dominance. KBSV Research believes the event’s impact will be modest, especially if shareholders opt for non-cash exits, reducing sell pressure. VEIL’s 15.5% year-to-date NAV growth (USD terms) suggests withdrawal demand stems from a small minority (20%) seeking short-term rebalancing, not broader dissatisfaction.

Mid-term, Vietnam’s market remains promising regionally, driven by upgrade prospects and attractive valuations relative to earnings growth expectations.

VEIL’s top 10 holdings include Vietnam’s blue-chip leaders: VIC, VHM, MWG, VPB, BID, VCB, TCB, HPG, KDH, and CTG. Under the 30% withdrawal scenario, millions of shares per stock could be sold.