Stockholm (NordSIP) – After failing to meet their promise of great growth for over a decade, emerging markets have enjoyed a return to favour so far this year. The MSCI Emerging Markets index grew by 13.6% during the first six months of 2025. By the start of October, year-to-date growth exceeded 25%. To take advantage of this opportunity, Swedfund, Sweden’s development finance institution (DFI), has just announced a new investment in a fund focused on Vietnam, a country which has enjoyed good economic conditions lately.
The Appeal and Opportunity of Vietnam
Vietnam appears to be one of the countries in this market segment that has benefitted the most from this. According to the World Bank’s latest Vietnam Economic Update report, the country’s economy is expected to grow by 6.6% in 2025, supported by a strong first half when growth accelerated to 7.5%. Vietnam has also made significant progress in reducing the share of the population living in poverty from 20.7% in 2010 to 4.2% in 2022. Despite the great strides the country appears to have made combating poverty, this has not translated into a clear trend of decreasing inequality.
The World Bank also notes that “FDI has remained resilient despite global trade uncertainty”. In the 12 months to June 2025, FDI disbursements in Vietnam reached US$26.2 billion, accounting for 5.5% of GDP. This figure represents a 9.3% year-on-year growth. FDI commitments also registered a 23.8% year-on-year increase by June 2025, mostly directed to manufacturing (51%) and real estate (22%). Nevertheless, financial developments have been mixed so far this year, although the net effect seems positive. While the stock market grew by 31%, the Vietnamese Dong devalued by 3.6% in relation to the US Dollar, in the first three quarters of 2025.
However, the country still faces challenges, including the need for more financing to build infrastructure, support small businesses and ensure greater access to financial and other services. The Vietnamese banking system is still in an early stage of development with limited opportunities for long-term financing, especially for SMEs. The young population, where approximately 70% are between the ages of 15 and 64, and the growing middle class contribute to an emerging entrepreneurial culture. SMEs make up 98% of registered companies in the country.
Swedfund’s US$15 million Investment in Vietnamese SMEs
Swedfund announced it is investing US$15 million in Excelsior Capital Vietnam Fund II to support private sector development and job creation in Vietnam. Excelsior II provides growth capital to medium-sized companies and will contribute to job creation. Examples of the fund’s investments include SIS HCM Stroke International (healthcare), Kapla Vietnam (education), Hasaki Beauty & Clinic (consumer retail) and VCCorp (technology). As a fund following the 2X Challenge framework, Excelsior Capital Vietnam Fund II is also committed to improving opportunities for women and promoting their participation in Vietnam’s formal economy.
“With our investment in Excelsior II, we are increasing access to capital for medium-sized and growing companies. This strengthens the Vietnamese private sector and contributes to the creation of more jobs with decent working conditions, improved industry standards and increased female representation in the workforce and in leadership positions. It also contributes to increased participation in the formal economy, in a country where 65 percent of the workforce is active in the informal economy. In this way, Swedfund’s investment supports a more sustainable and resilient economy,” says Sofia Gedeon, Investment Director for Sustainable Enterprises, Swedfund.
This is not the first investment by a DFI into Excelsior Capital Vietnam. Back in January 2020, Belgium’s BIO also invested US$10 million in Excelsior Capital Vietnam. Then, in June 2024, the European Investment Bank (EIB) announced it had invested US$40 million in the fund. FMO, from the Netherlands, reportedly invested US$15 million in November 2024. Just two months ago, Switzerland’s SIFEM reported it had invested US$20 million in the private equity fund.
