Intel would make the investment through Intel Capital, its venture capital arm, joined by private equity firm Texas Pacific Group.

FPT, a provider of information and communications-technology services, said it would use the funding to add new products and services and expand geographically.

This is one of the largest investments made in a Vietnamese technology firm by private equity investors from outside the country.

The Hanoi-based FPT reported 2005 revenues of more than $517 million and a growth rate of 70 percent.

The company provides systems integration, software services, telecommunications, and Internet services, as well as e-media content.

It currently provides software development services in Japan and said it aimed to expand to other countries.

Vivek Paul, a partner at Texas Pacific, will serve as a special strategic advisor to FPT.

Paul cited several strengths of the Vietnamese market – including a literacy rate of over 96 percent, a rapidly growing middle class, Asia's second-highest annual GDP growth rate, and a ticket to join the World Trade Organization next month.

Varun Kapur, managing director, Intel Capital Asia Pacific, said: "This first-of-its-kind investment is a milestone for Vietnam, and reflects Intel Capital's confidence in the market and its business climate."

"Venture investing has the potential to contribute significantly to the growth of Vietnam's IT (information technology) industry."

The investment reflects a growing confidence in the Vietnamese economy, which grew at 8.4 percent last year. Vietnam's tech market, valued at $800 million, is growing at about 20 percent a year.

Earlier this year, Intel said it would build a $605 million microchip assembly and testing plant in the commercial hub, Ho Chi Minh City.

Microsoft Chairman Bill Gates was in Hanoi in April to talk about university cooperation, and Motorola CEO Ed Zander lauded Vietnam's telecom deregulation in June.

Source: Reuters