The merger and acquisition (M&A) scene in Vietnam has become increasingly active with more domestic firms setting up ties with global partners so their brands can reach global customers and develop domestically.
According to the Ministry of Planning and Investment, the value of M&A deals in the country hit 5.43 billion USD during January-July, and the value will surge to 6.7 billion USD for the whole year.
The Southeast Asian country has become a top destination for M&A deals for investors from the Republic of Korea (RoK), China’s Hong Kong, Singapore and Japan as Asian multinationals see the benefits of a presence in one of the region’s fastest-growing economies.
Korean investors have dominated the M&A market in the Southeast Asian country, the M&A Vietnam Forum (MAF)’s M&A report showed.
Conglomerate SK Group signed a billion dollar deal with Vingroup in May to acquire 154.3 million primary shares in Vingroup and 51.4 million shares of the firm’s Vincommerce for 1 billion USD. After the transaction, SK would own a 6 percent stake and become a strategic partner of the Vietnamese real estate, tech, retail and services giant.
The company also expressed its interest in purchasing additional shares of the PetroVietnam Oil Corporation (PVOIL) after buying 3.55 million shares in the firm last year.
Furthermore, Shinhan Card bought Prudential Vietnam Finance Company Limited at 151 million USD, while Samsung SDS has pledged to purchase a 25 percent stake of CMC, Vietnam’s leading information technology service provider.
Hong Kong was also a notable investor in the first half as it landed 5.3 billion USD in Vietnam. Particularly, Hong Kong’s Beerco Limited spent 3.85 billion USD on acquiring stake in Vietnam Beverage Co., Ltd, a local unit of Thai Beverage Public Co., Ltd.
As for Singaporean investors, they were the third largest acquirers of M&A in Vietnam with deals worth 1.6 billion USD during 2018-2019.
The Singaporean government’s GIC Private Limited spent 1.3 billion USD to buy shares and provide debt instruments for Vingroup’s Vinhomes in April. Last year, the fund acquired 51.9 million shares at Masan Corporation for 196 million USD.
Other renowned businesses in Singapore like Keppel Land, CapitaLand and Mapletree have been involved in a variety of M&A deals in the Vietnamese real estate market.
Meanwhile, many domestic firms have also used M&A deals to consolidate their position in the domestic market. Outstanding deals include Saigon Co.op buying 15 retail stores and an e-commerce platform of French-based Auchan Retail, Thaco buying 70 million shares of Hoang Anh Gia Lai Agricultural Company (HNG) and Vingroup acquiring the Fivimart supermarket chain.
Deputy General Director of Saigon Co.op Nguyen Anh Duc said the takeover of Auchan is a sound M&A deal as most Auchan supermarkets have good locations, and this helps Saigon Co.op expand.
Meanwhile, Managing Director for KPMG Japan Masahiro Kotaka, who has spent eight years coordinating with Japanese enterprises on M&A deals in Vietnam, said M&A doesn’t just mean a change in ownership, but it also serves as a lever for firms to grow stronger and improve competitive capacity.
However, several experts pointed out challenges that hamper M&A activities in Vietnam, including land use right after M&A and valuation of State-owned enterprises for equitisation.
Deputy Minister of Planning and Investment Vu Dai Thang said the Vietnamese Government will study policies to boost M&A activities in the nation, saying the amended Business Law is expected to protect the rights of shareholders and investors, as well as lure more foreign investment.
According to a report on VNA