Vietnam’s M&A value reaches $5.4 billion in seven months

The figure included the $885 million equity purchase of South Korean KEB HANA Bank for a 15 per cent stake by the Bank for Investment and Development of Vietnam (BIDV) announced on Monday.
Since 2018, Vietnam has emerged as a major M&A market in the Southeast Asian region with many big value deals. Total M&A value last year reached $7.64 billion, down 25 per cent compared to 2017’s record value of $10.2 billion. However, if the $5 billion deal from ThaiBev’s purchase of Sabeco’s equity in 2017 is excluded, the 2018’s M&A value still increased by 41.4 per cent year-on-year.
Dang Xuan Minh, general director of AVM Vietnam, said foreign investors were seeking opportunities in the consumer goods manufacturing and real estate industries in Vietnam to capitalise on the huge market of more than 96 million people.
“At a Bloomberg’s investment conference in Thailand recently, many foreign investors expressed their keen interest in Vietnam’s market and said they want to seek opportunities here,” Minh told the meeting to introduce the Vietnam M&A Forum 2019 on Tuesday.
Interested industries included consumer goods, retail, real estate, education and logistics, Minh said, while also pointing out the obstacles that might hinder foreign investment including slow state-owned enterprise (SOE) equitisation process, high State holding ratio in equitised companies, overvalued assets and the lack of transparency and English proficiency in Vietnamese firms.
Minh predicted the M&A value could reach $6.7 billion by year-end, but left open the possibility of higher value if big deals like KEB HANA Bank in BIDV were to be concluded.
Michael DC Choi, deputy general director of Korea Trade Investment Promotion Agency (KOTRA) told Vietnam News that valuation was one of the biggest obstacles to seek investment in small companies in Vietnam.
“There’s no clear standard to value the company properly. You have to trust and take all risks in the deal,” he said.
After a decade of strong growth, Vietnam’s M&A market value reached nearly $50 billion and is predicted to enter a new era with various opportunities.
Deputy Minister of Planning and Investment Vo Thanh Thong said Vietnam was promoting M&A activities in tandem with SOE equitisation in various sectors like transportation, infrastructure, food, agriculture, telecommunications, trade, services and tourism.
Thong said recent new policies such as the draft amendments and supplementations to some important laws (the Law on Investment, Law on Enterprises and Law on Securities), the draft resolution on attracting new-generation foreign investment and newly-signed free trade agreements would help lure more investment, including M&A deals.
He said the Politburo would for the first time issue a separate resolution on attracting foreign investment in the future.
Meanwhile, Le Trong Minh, chief editor of Vietnam Investment Review, the event organiser, said Vietnam also faced challenges from domestic and international factors such as rising trade tension in the world, slow equitisation and divestment of state-owned enterprise and modest local market value.
The 11th annual Vietnam M&A Forum 2019 themed “Going for breakthrough” will take place in GEM Conference Centre in HCM City on August 6. The forum will assess the M&A trends in the next few years, analyse new capital flows, opportunities and driving forces for M&A in Vietnam, Minh said.