Our portfolio company FPT Corporation (FPT) has advanced its long-standing IT service partnership with Microsoft by becoming the first Enterprise System Integrator (ESI) in Southeast Asia to be named a Frontier Partner – a recognition designated only to tech providers qualified to deploy Microsoft's organization-wide AI and cloud solutions across enterprise clients.
According to Microsoft, more than 90% of Fortune 500 companies now use its AI assistant, Copilot, in everyday work, and 80% have integrated Microsoft AI agents into their operations, especially in manufacturing, retail, and financial services. This increasing demand for AI adoption is why Microsoft needs certified partners, like FPT, to scale its service coverage and ensure high-quality delivery to enterprises worldwide. Being the only ESI partner in Southeast Asia to hold this status strengthens FPT's competitive positioning against regional peers, opening access to larger clients and higher-value contracts.
FPT aims to own five AI factories by 2030, increasing AI and cloud capabilities.
Frontier Partner status is the most selective tier within Microsoft's global partner program, reserved for global IT service providers that meet strict technical criteria on AI transformation. Partners only qualify for this status if they help enterprise clients achieve success across four key areas under Microsoft’s framework: enriching employee experiences, reinventing customer engagement, reshaping business processes, and driving innovation. These stringent requirements reflect a broader change in how enterprises are approaching AI adoption: until recent years, it remained fragmented, used primarily to boost productivity in isolated areas rather than being embedded across core business operations.
To address this, Microsoft introduced the concept of Frontier Firms, organizations that systematically deploy AI across all functions, and the corresponding Frontier Partner designation for IT providers capable of delivering that transformation from start to finish. For FPT, qualifying for this status means it is positioned on the right side of that divide: as Microsoft's enterprise client base shifts toward organization-wide AI deployment, partners that meet the Frontier standard will be better placed to win and retain large-scale contracts, while those that cannot will lose market share.
FPT is Vietnam's largest listed technology company and one of the top holdings in our portfolio, providing end-to-end IT services to enterprises across more than 30 countries. In recent years, AI's increasing potential to displace traditional IT outsourcing services has triggered mixed sentiment among investors, as noted by Chairman Truong Gia Binh during FPT's 2026 AGM. However, the company has responded by integrating AI into its business strategy to remain competitive internationally. In our view, the rapid rise of AI has created gaps in the IT outsourcing market, where established providers like FPT can upgrade their capabilities and service offerings to capture new demand – which smaller competitors cannot address as effectively without the right strategy, resources, and experience.
FPT has leveraged this market transition to strengthen its earnings profile: in 2025, AI-related service revenue grew more than 40% year-on-year and accounted for around 7% of its global IT services revenue, a faster pace than many international peers. While AI is not yet a dominant share of the overall business, strong revenue growth in this area reflects FPT's structural shift away from discrete development projects and toward integrated transformation programs. This shift is reflected in the quality and scale of contract wins: the number of deals valued above USD 10 million more than doubled to 26 in 2025, and the company secured a record USD 256 million five-year contract with a major Asian energy group, its largest single contract to date.
In 2025, FPT posted nearly USD 2.7 billion in total revenue, primarily driven by the technology segment (the group also operates in other areas such as education and investment). In Q1/2026, the company reported net profit growth of over 14% YoY alongside a 22% increase in signed backlog, indicating a healthy pipeline despite a global IT spending slowdown, and suggesting that FPT's expanded service offerings are gaining traction with select enterprise clients. This creates forward earnings visibility that is not yet reflected in current reported figures, and we expect it to translate into accelerating revenue and profit recognition in the second half of 2026, as large transformation contracts typically take time to ramp up before contributing fully. For the full year, management targets pre-tax profit growth of 15% for the group and 25% for the technology segment, which remains aligned with our view, and is even somewhat conservative considering the strong contract backlog the company has secured over the past two years.
FPT’s growing share of larger contracts and deepening partnerships with big tech leaders, such as Microsoft, demonstrate a business that is moving up the global value chain, with AI acting as an enabler of higher-quality work rather than a threat to it. In addition to healthy global demand across key markets in Japan, Asia Pacific, and Europe, the company will benefit from increasing domestic IT spending, following Vietnam’s national digital transformation program targeting full online public services by 2030 – where FPT was also assigned as a key private partner in strategy and execution. In our view, FPT’s current valuation is highly attractive, considering its strong growth fundamentals and clear earnings visibility on a 3-to-5-year horizon.
The Kenno Vietnam Fund invests in fundamentally sound Vietnamese companies at attractive valuations. FPT represents our top technology holding, where expected returns remain driven by its fast-growing global IT services, strong earnings visibility, and unique competitive positioning. If you would like to learn more about the fund or our investment approach, feel free to reach out to us.
