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Warburg Pincus is finding new investment targets in the consumer, banking and logistics sectors of Vietnam as its economy grows and capital markets develop, said the regional head of the private equity firm which has committed over $1 billion in Vietnam.

“It’s a market that we think there’s a lot of opportunity in,” Jeffrey Perlman, Southeast Asia chief for Warburg, told Reuters in an interview on Thursday. “Four, five years ago, even in Vietnam there wasn’t an understanding of what was private equity and what it will do to businesses.”

Vietnam’s emergence as a large manufacturing destination next to China helped the Southeast Asian nation’s economy grow at 6.8 percent last year, the strongest since 2010. The growth is rapidly building up a huge middle class that is boosting consumer spending in a country of about 100 million.

Its stock index VNI has risen 20 percent this year, the best performance in Southeast Asia, after surging by 50 percent last year.
Perlman said the growth in Vietnam’s capital markets to $200 billion in value from some $35 billion five years ago, was a big draw for global investors, and he expected local regulators to bring in more reforms to develop the markets.

Warburg is the largest private equity investor in Vietnam, which has also seen sizeable investments from rivals KKR & Co. (KKR.N) and TPG.

Warburg’s first Southeast Asian investment was in Vietnamese shopping mall owner Vincom Retail VRE.HM, in which its consortium invested $300 million. Vincom Retail’s shareholders raised over $700 million in November, valuing it at $3.4 billion, helping Warburg more than double its investment.

This month, Warburg announced a $370 million investment in Vietnam Technological and Commercial Joint Stock Bank, a sector Perlman said was set for huge growth. [nL3N1QU3EK]

“You have two-thirds of the population who don’t have a bank account. More than 90 percent don’t have access to credit cards. There is a huge runway in front,” he said.

Though company valuations were high across many markets globally, Vietnam’s strong growth prospects stood out. “You have an ability to potentially pay a fuller price when there’s actually growth underlying the investment,” Perlman said. He did not specify how much more Warburg plans to invest in the country or identify potential targets.

Warburg Pincus’ current seven portfolio companies in Southeast Asia, include a venture with Vietnamese property developer Becamex, Indonesian ride-hailing firm Go-Jek and Singapore-based ARA Asset Management.