Japanese investors secure foothold in leading Vietnamese brands through M&A. They have poured billions of dollars to purchase stakes at Vietnamese businesses over the past decade.
“M&A investments in Vietnam will be a trend for Japanese companies which will last for the years to come”, said the head of the Cross-border Division of RECOF.
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After a decade of M&A, Japanese investors now own several leading brands in Vietnam, as of May 2021, Japan was the second-largest foreign investor in Vietnam with the total registered capital of $63 billion. Japanese investors have also been actively contributing capital and share purchases to Vietnamese firms in various fields such as retail, food and beverage, pharmaceutical, real estate, and finance.
Many well-known Vietnamese brands are now owned by Japanese investors. In 2011, Unicharm acquired local company Diana. In 2015, Unicharm expanded its factory in Bac Ninh province, targeting a bigger slice of the market.
Also in the same year, brewery group Kirin Holdings acquired major Vietnamese soft drink producer Interfood Shareholding Co. as part of its plans to capitalise on the Vietnamese market. Kirin purchased 57.25 per cent of the total outstanding shares in Interfood for an undisclosed sum and also bought out Wonderfarm Biscuits & Confectionery Sdn. Bhd., a Malaysia-based firm that manages the intellectual property rights of Interfood.
Eath Chemical also took over A My Gia, which is known for the Gift brand household detergent and Ami brand air fresheners. Sojitz Corporation spent around $91 million on acquiring a 95 per cent stake in Saigon Paper Corporation, which is the largest tissue paper and industrial paper producer nationwide. Japanese drugmaker Taisho Pharmaceutical Co., Ltd. also takes control of Hau Giang Pharmaceutical JSC. Other M&A deals involving Japanese investors include NTTData’s acquisition of Payoo, AEON Group’s acquisition of Citimart, and Line’s acquisition of Webtretho.
In 2021, Maruha Nichiro decided to acquire Saigon Food in order to secure a new marine product processing base and to acquire a platform for the development, processing, and sales of processed foods. Meanwhile, Japanese mega financial institution Sumitomo Mitsui Financial Group (SMFG) has just acquired 49 per cent stake in Vietnam’s largest consumer finance company FE Credit. The Japanese bank will invest more than $1.4 billion in FE Credit as early as October.
Speaking at the Vietnam M&A Forum 2020, Masataka “Sam” Yoshida, head of the Cross-border Division of RECOF Corporation and CEO of RECOF Vietnam Co., Ltd. said that M&A investments in Vietnam will be a trend for Japanese companies which will last for the years to come.
The first trigger is the destiny for Japanese companies to find new markets to expand outside Japan. The fact is that most of the sectors in Japan are already mature. For instance, almost one-third of the Japanese population is over 65 years old. This makes the average age of Japanese people 48.4 years, almost 20 years older than the figure for Vietnam. Also, around 276,000 people (more than a quarter of a million) are disappearing every year.
“The second trigger is ‘M&A as a growth strategy’ which is backed up by the abundant accumulated cash during the last 20 years which is reaching $2.34 trillion as bank deposits with almost zero interest rate. Pushed by shareholders’ requirements to make use of the money, these funds have started to flow into the M&A market which made its highest record in 2019 by 4,088 deals. This means there were more than 4,000 active and successful Japanese investors,” he said.
By Thanh Van @ VIR