The Asian Development Bank ( ADB ) made its first private sector investment in Vietnam’s education sector as it led a US$150 million syndicated sustainability-linked loan to Vinschool Joint Stock Company. The proceeds of the loan, announced on March 18, will be used to expand the Vinschool education system, providing educational facilities for 20,400 students in urban areas of Hanoi, Ho Chi Minh City and Hung Yen.

ADB country director for Vietnam Shantanu Chakraborty says the loan highlights the bank’s commitment to fostering sustainable development in the country. “By supporting the country’s first sustainability-linked loan in the education sector,” he adds, “we aim to enhance educational infrastructure while contributing to new residential hub development in the country.”

Acting as the mandated lead arranger and bookrunner, the ADB has syndicated and structured a financing package that includes a US$40 million loan from the bank’s ordinary capital resources, a US$35 million loan from the Leading Asia’s Private Sector Infrastructure Fund 2 ( LEAP 2 ) administered by the ADB, and US$75 million in parallel loans.

The parallel loans are comprised of US$40 million from ILX, an Amsterdam-based emerging market asset manager, and US$35 million from the Emerging Africa & Asia Infrastructure Fund, an emerging market infrastructure debt fund established by the Private Infrastructure Development Group and managed by NinetyOne. The loan has been validated through a second-party opinion from DNV Business Assurance Vietnam.

Vietnam has made significant progress, according to the ADB, in expanding education coverage, achieving an impressive 98% literacy rate and over 98% primary education enrollment. However, as the nation strives to transition from a developing to a middle-income country, there is a critical need to improve education quality and enhance education access in rapidly urbanizing cities. The private sector, including institutions like Vinschool, the ADB points out, is vital in bridging this gap.

“This investment will enable us to provide high-quality learning opportunities to more students while setting a benchmark for sustainable education in Vietnam,” says Phan Ha Thuy, Vinschool’s CEO. “This is a project that underscores Vinschool’s commitment to environmental, social and governance principles, reinforcing its dedication to sustainable development.”

LEAP 2 is an ADB-managed fund with a US$1.5 billion commitment from the Japan International Cooperation Agency. It focuses on sustainable private sector infrastructure projects that reduce carbon emissions, improve energy efficiency and provide affordable health care, education and communication services to the ADB’s developing member countries.

Established in 2013, Vinschool is the largest private school system in Vietnam, offering high-quality education from kindergarten to high school. Vinschool currently serves more than 48,000 students across 54 campuses in Hanoi, Ho Chi Minh City and four other provinces, offering both national curriculum and Cambridge bilingual programmes. Vinschool is a subsidiary of Vingroup Joint Stock Company, one of Vietnam’s largest conglomerates.