Vietnam Enterprise Investments Limited (VEIL.L): 5 FORCES Analysis [Dec-2025 Updated]

How does Vietnam Enterprise Investments Limited (VEIL) navigate the push and pull of suppliers, customers, competitors, substitutes and new entrants in a fast‑maturing Vietnamese market? This piece applies Porter's Five Forces to reveal VEIL's unique strengths-cornerstone capital, deep local networks and scale-against mounting pressures from activist shareholders, low‑cost ETFs, regional rivals and regulatory barriers; read on to see which forces truly shape its future performance.

Vietnam Enterprise Investments Limited (VEIL.L) - Porter's Five Forces: Bargaining power of suppliers

Management fee structure limits manager leverage. The primary supplier to Vietnam Enterprise Investments Limited (VEIL) is its investment manager, Dragon Capital Management (HK) Limited, contracted on a flat fee of 1.50% of Net Asset Value (NAV) as of December 2025. This simplified flat fee, implemented in July 2024 (replacing a prior tiered schedule), removed performance-based upside and capped the manager's revenue potential from VEIL. With total net assets approximately £1.35 billion ($1.81 billion) by mid-December 2025, the annual management fee payable is estimated at roughly $27 million (1.50% of $1.81bn). The Board of Directors retains active oversight, having completed a benchmarking exercise in H2 2025 to ensure director and management costs remain within market norms. The fund's ongoing charges ratio (OCR) stood at 1.96% in late 2025, reflecting the combined cost of management, custody, audit, and specialist local operations in Vietnam.

Service provider concentration remains relatively low. VEIL utilises a select group of high-quality institutional service providers-Standard Chartered Bank as custodian and administrator, and KPMG as auditor-whose fees and services are included within the fund's expense profile (TER ~1.88% in FY2024; stable through 2025). Although these providers are specialist and long-serving (many relationships exceeding a decade), they compete in a global market for fund services, limiting their ability to exert excess pricing power. The Board can rotate or re-tender custodial and audit contracts, and periodic benchmarking exercises in 2024-2025 have reinforced cost discipline.

• Key service providers: Standard Chartered (custody/administration), KPMG (audit)
• TER (FY2024): ~1.88%; OCR (late-2025): 1.96%
• Contract flexibility: Board authority to retender/rotate providers
• Provider tenure: many >10 years, contributing to operational stability

Access to IPOs provides unique leverage. As the largest active foreign investor in Vietnam with roughly $1.8bn AUM in late 2025, VEIL frequently acts as a cornerstone investor, giving it disproportionate influence in primary capital raisings. In 2025 VEIL participated as a cornerstone in a major IPO allocation, securing preferential pre-IPO and private-placement access that smaller funds and retail investors could not obtain. This "power of the purse" reverses typical supplier leverage: VEIL acts as a supplier of capital to issuers and the state, enabling negotiated allocations, favorable pricing, and board/placement influence in some transactions. This strategic position is reinforced by Vietnam's policy emphasis on private-sector growth and a target GDP growth near 8% for 2025, which increases issuance activity and demand for large cornerstone investors.

Limited leverage from local stock exchanges. The primary tradable-asset platforms-the Ho Chi Minh Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX)-effectively hold near-monopolistic control over Vietnam-listed equities and set trading rules (e.g., T+0 settlement reforms, pre-funding requirements) that shaped the FTSE Russell emerging markets upgrade consultations in late 2025. VEIL must comply with exchange rules; however, its market significance-often holding 5-10% of the free float in top-tier names such as Mobile World Group (MWG)-gives it substantive influence in regulatory dialogue. The fund's portfolio concentration (top 10 holdings ≈ 59.6% of AUM as of late 2025) makes it a critical liquidity provider to exchanges, creating mutual dependence that constrains exchanges' ability to impose onerous fees or restrictive measures on VEIL.

• Supplier-power constraints: flat management fee, no performance fee, board oversight and benchmarking
• Supplier-power mitigants: competitive global market for custody/audit, Board's contractual leverage
• Supplier-power reversals: VEIL's role as cornerstone investor and major liquidity provider
• Residual risks: exchange rule changes (settlement/pre-funding) that increase operational costs or trading frictions

Vietnam Enterprise Investments Limited (VEIL.L) - Porter's Five Forces: Bargaining power of customers

The 'customers' of VEIL - its shareholders - exert substantial bargaining power, driven by a mix of institutional activists and an expanding retail base. As of 18 December 2025, VEIL's share price of 745p traded at a -12.46% discount to an NAV of 851p, a marked narrowing from the 21.2% discount at 31 December 2024. This price-to-NAV gap is a primary channel through which shareholders influence strategic decisions and capital allocation.

Institutional investors, including value funds and arbitrageurs, are particularly influential. In the first ten months of 2025 the Board repurchased c.11.65% of outstanding shares (21.5 million shares) to support the share price - an explicit response to investor demands for capital return rather than reinvestment. The Board's actions illustrate that large holders can compel significant on-balance-sheet adjustments.

Shareholder instruments and governance pressures available to customers include:

• Share buybacks and special distributions (capital return) - deployed actively in 2025 (21.5m shares repurchased).
• Conditional Tender Offer (100%, five-year, performance‑related) - initiated 31 March 2025, providing an NAV exit if the manager fails to outperform VNI to 2030.
• Periodic discontinuation (wind‑up) resolutions - voted on at the June 2025 AGM and a persistent threat that disciplines management.
• Board composition and governance votes - institutional blocks forced a Board refresh in 2025 (new Chair + 2 directors) and prompted a public target to reduce discount <10% by end‑2025.

The expanding retail presence - facilitated by UK platforms such as Hargreaves Lansdown and AJ Bell - has shifted bargaining dynamics by increasing liquidity and aggregate demand. The market's anticipation of Vietnam's upgrade to FTSE 'Secondary Emerging Market' status in 2025, estimated to trigger $3-5bn in passive inflows, materially boosted investor interest: VEIL's share price rose >30% between June and October 2025 while NAV rose 27% over the same period, tightening the 12‑month average discount from 18.67% to ≈15.5% by late 2025.

Nevertheless, customer power is two‑edged: retail and institutional holders can rapidly withdraw capital on macro or idiosyncratic shocks. The April 2025 correction saw VEIL's NAV decline 9.8%, demonstrating the speed at which investor sentiment can reverse gains and re‑widen discounts. High concentration among activist institutional holders amplifies this risk - collective voting power can force structural changes, tender offers, or further capital returns, especially given VEIL's c.£1.2bn market capitalisation which makes coordinated engagement economically viable for activist funds.

Given these dynamics, VEIL's Board and Investment Manager operate under continuous pressure to reduce the discount, deliver alpha relative to the Vietnam Index (VNI), and use capital actions strategically. The conditional tender mechanism and material buybacks in 2025 are evidence of shareholders' effective bargaining power to demand both performance and liquidity options.

Vietnam Enterprise Investments Limited (VEIL.L) - Porter's Five Forces: Competitive rivalry

VEIL's dominance in the specialised Vietnam fund niche is underpinned by scale, tenure and portfolio focus: 30 years of track record and $1.8 billion in assets under management (AUM) as of December 2025 give VEIL a significant edge in sourcing, liquidity provision and investor reach versus London-listed peers. Primary listed competitors include VinaCapital Vietnam Opportunity Fund (VOF, ~ $1.0 billion AUM) and Vietnam Holding (VNH, ~ $80 million AUM). VEIL's portfolio remains concentrated in listed Vietnamese equities-over 70% allocated to banking, IT and retail-whereas VOF has a 22% allocation to private equity and real estate, reducing its direct sensitivity to listed-market rallies such as the VNI's 21.2% year-on-year profit growth in Q3 2025.

Competitive intensity is driven by performance benchmarking against the VN Index (VNI) and peer funds. VEIL reported a 14.3% NAV total return in GBP for 2024 versus the VNI's 12.1%. In the first nine months of 2025 VEIL recorded a 15.8% NAV increase, a 1.4 percentage-point lead over the benchmark. Outperformance ('alpha') is central to capital inflows given alternatives such as the VanEck Vietnam ETF (VNM, ~ $440 million AUM). Portfolio decisions-most notably a strategic tilt to mid-cap names implemented by manager Tuan Le in early 2025-were key contributors to relative performance versus both index and peers; VOF's reported five-year NAV return of c.68% further heightens the need for VEIL to sustain differentiated returns.

Fee competition is a tactical lever in the rivalry. VEIL moved to a flat 1.5% management fee in mid-2024 and reported an ongoing charges ratio of 1.96% through 2025; the fund also removed performance fees to improve transparency for institutional investors. Low-cost ETFs present a structural threat on price: VNM offers materially lower fees (ETF ongoing charge typically below 0.7%-0.9%), pushing active managers to compress fees or justify higher costs via risk-adjusted outperformance and active access to IPOs and cornerstone allocations.

Key competitive dynamics shaping rivalry:

• Scale and distribution: VEIL's $1.8bn AUM supports larger IPO allocations, liquidity provision and marketing reach versus VNH and many domestic investors.
• Performance pressure: Relative NAV outperformance versus the VNI and peers is the primary driver of fundraising and retained capital.
• Fee positioning: A 1.5% management fee and 1.96% ongoing charge reduce price-based attrition to low-cost ETFs but require consistent alpha to justify active positioning.
• Access to primary market allocations: Cornerstone roles in IPOs and privatisations are competitive battlegrounds where VEIL's ability to deploy up to 10% of NAV into a single position creates tactical advantage.
• Specialisation vs diversification: VEIL's focus on listed sectors (banking, IT, retail) amplifies sensitivity to listed-market cycles while VOF's PE/real estate exposure provides diversification that appeals to different investor mandates.

The rivalry manifests across capital raising, performance marketing, fee structuring and primary-market deal origination. Intense competition for the same pool of international Vietnamese exposure keeps strategic moves-portfolio tilts, fee reductions, and active pursuit of cornerstone roles-at the centre of VEIL's ongoing competitive playbook.

Vietnam Enterprise Investments Limited (VEIL.L) - Porter's Five Forces: Threat of substitutes

ETFs offer a low-cost liquid alternative. The most direct substitute for VEIL is the VanEck Vietnam ETF (VNM), which provides broad exposure to the Vietnamese market at a lower management fee and with higher daily liquidity. VEIL's AUM is $1.8 billion versus VNM's $440 million; management fee differential is typically ~0.85% for VEIL (after fee caps and rebates historically) versus ~0.59% for VNM. VEIL benefits from the potential to trade at a discount/premium to NAV, which can produce alpha for long-term holders, whereas VNM trades at NAV intraday and avoids closed-end volatility, making it attractive to tactical investors seeking immediate liquidity.

Key competitive dynamics vs ETFs:

• Passive ETF growth: passive market share continues to rise globally, increasing substitution pressure.
• Performance divergence: VEIL can outperform due to small-/mid-cap and pre-IPO exposure; VNM constrained to liquid large-caps.
• Tactical vs strategic buyers: ETFs attract short-term and tactical flows; closed-end funds attract income/long-term yield-seeking investors.

Direct investment through local brokerage accounts. As Vietnam's capital markets modernize, sophisticated international investors increasingly open direct brokerage accounts to trade the VN Index themselves. Regulatory reforms aimed at achieving 'Secondary Emerging Market' status - including removal of pre-funding requirements and streamlined custody - have reduced frictions for foreign participation. In 2025, foreign investors withdrew nearly $5.0 billion from Vietnamese markets, while domestic investors absorbed much of the flow amid a 7.9% GDP growth rate, illustrating rising domestic participation and the viability of direct investment as a substitute for pooled vehicles like VEIL.

VEIL's defensive points vs direct investment:

• Research advantage across ~1,700 listed companies where only ~25-30 meet institutional liquidity/governance thresholds.
• Access to pre-IPO and placement opportunities that direct retail accounts typically cannot reach.
• Operational simplicity for offshore investors avoiding tax, custody, and settlement complexities.

Regional emerging market funds dilute focus. Investors can choose ASEAN or broader Emerging Market (EM) funds as substitutes for a Vietnam-only vehicle. These funds reduce country-specific volatility by allocating across Indonesia, Thailand, Philippines, Malaysia and other EMs. During the 'tariff tantrum' of early 2025, flows shifted from Vietnam-specific vehicles toward broader EM funds as investors hedged against a scenario in which US tariffs could reduce Vietnamese export growth by up to ~20% in affected sectors.

Private equity and venture capital alternatives. Institutional investors can allocate to Vietnam-focused PE and VC funds that target the same high-growth secular trends (retail consolidation, technology, fintech, real estate) but with multi-year lock-ups and active operational support. VEIL holds a small allocation to 'incubator' stocks and pre-IPO positions to emulate private-equity-style exposure within a liquid, listed wrapper. In 2025 the recovery in real estate and retail attracted increased PE capital focused on the estimated 75% of Vietnam's retail market that remains unorganized; PE funds often offer concentrated control positions and projected IRRs of 18-25% for successful exits in Vietnam.

Strategic implications for VEIL:

• Maintain differentiated sourcing: continue accessing pre-IPOs, private placements and small-/mid-cap opportunities unavailable to ETFs and passive funds.
• Diversify shareholder base: attract long-term institutional capital less likely to migrate to ETFs or direct accounts.
• Demonstrate consistent outperformance vs passive substitutes: highlight 2024 NAV return of +14.3% (GBP) and attribution to concentrated stock selection beyond large-cap indices.

Vietnam Enterprise Investments Limited (VEIL.L) - Porter's Five Forces: Threat of new entrants

High barriers to entry due to local expertise: Entering the Vietnamese investment market requires a deep, localized network and a track record that takes decades to build, serving as a formidable barrier to new entrants. Dragon Capital, the manager of VEIL, has been on the ground since 1994 and employs over 200 people, a scale that is difficult for a new international fund manager to replicate quickly.

The 'trust' factor is paramount in Vietnam, where corporate governance can be opaque; VEIL's ~30-year history and 'cornerstone' status in IPOs are assets that cannot be bought. VEIL's listing on the London Stock Exchange and FTSE 250 status provide regulatory comfort and liquidity that a new, smaller fund would struggle to achieve. In 2025, no major new dedicated Vietnam closed-end funds were launched, highlighting the difficulty of competing with established giants.

Regulatory hurdles for new fund structures: Launching a closed-end fund on the LSE involves substantial legal, regulatory, and marketing costs, often exceeding several million dollars. New entrants must navigate Cayman Islands structures and Vietnamese regulation, including foreign ownership limits (FOL) that still restrict access to many top-tier stocks.

• Typical LSE fund launch costs: legal + listing + marketing > $2-5 million (initial fixed cost).
• Complex jurisdictions: Cayman entity setup, UK listing compliance, Vietnamese market access rules.
• FOL constraints: many top-tier Vietnamese stocks have limited foreign room; VEIL holds legacy FOL-constrained positions acquired earlier.

VEIL often holds 'FOL-constrained' stocks acquired years ago, a first-mover advantage that new funds cannot easily overcome without paying premiums in the off-market foreign room. In 2025, the Vietnamese government's focus was on upgrading market infrastructure rather than easing entry for foreign fund managers, a regulatory stance that favors incumbents who already have licenses and local relationships.

Scale and liquidity requirements favor incumbents: Institutional investors typically demand a critical mass to ensure liquidity and reasonable expense ratios. A viable new Vietnam-focused fund would generally need $200-500 million AUM to avoid prohibitive ongoing charges. VEIL's AUM of approximately $1.8 billion allows it to spread fixed costs across a large base, enabling a management fee of 1.5% and an ongoing charge of 1.96%.

• VEIL AUM: ~$1.8 billion (2025).
• VEIL management fee: 1.5%; ongoing charge: 1.96%.
• Typical small new fund ongoing charge: likely >2.5% if AUM < $200-500m.
• Market stress: foreign outflows in 2025 aggregated ~$5 billion, increasing preference for liquid, large-cap vehicles.

VEIL's average daily trading volume on the LSE provides the 'exit liquidity' institutional investors demand. In a market where foreign outflows reached $5 billion in 2025, the safety and liquidity of a large, established fund like VEIL are significant deterrents to new, smaller competitors.

Limited pool of high-quality investable assets: While Vietnam lists over 1,700 companies, the number that meet international institutional standards for size, liquidity, and transparency is limited-estimated at roughly 80-100 companies. VEIL's 'Top-80' coverage universe already captures the majority of these high-quality assets, constraining the opportunity set for new entrants.

In 2025, VEIL's top ten holdings accounted for nearly 60% of AUM, reflecting concentration in the highest-quality names. A new entrant would likely compete for the same limited set of investable securities but without VEIL's low cost-basis, long-term relationships with management teams, or prior allocations within FOL limits. This asset scarcity reduces differentiation potential and increases competition-driven price pressure for newcomers.