A panel discussion at the "Consumer goods and distribution sectors: M&A trends and strategies to raise investment capital for Vietnamese enterprises" conference held in HCM City on March 12. — VNS Photo

HCM CITY — Việt Nam's mergers and acquisitions market is poised for growth in 2024 with foreign investors scouring for strategic deals in the dynamic market and local firms needing capital to restructure but unable to source domestically, a conference heard in HCM City on March 12.

Speaking at the "Consumer goods and distribution sectors: M&A trends and strategies to raise investment capital for Vietnamese enterprises" organised by the Business Association of High Quality Vietnamese Goods and the Leading Business Club, Dr Nguyễn Tuấn Anh of RMIT [University] Vietnam said investors are expected to pursue businesses with stable and long-term investment strategies, including those in agriculture and food sectors.

Investors also look for opportunities in sectors that offer attractive valuations amid the market downturn, such as real estate and construction.

He cited figures from KPMG showing over 260 M&A deals worth more than US$4.4 billion were completed in the first 10 months of last year, 80 per cent of it in the healthcare, finance and real estate sectors.

The average value of a transaction was $54.5 million.

Unlike three years ago, when domestic investors dominated, foreign investors made up the top five in terms of transaction value. Japan, Singapore and the US were some of the most engaged foreign investors, collectively accounting for over 70 per cent of the overall reported deal value.

Anh forecast that foreign investors would continue to dominate this year too.

In recent years Japanese businesses have been involved in lots of M&A deals.

Japanese investors, faced with a devaluing yen and domestic constraints, are increasingly looking at investment opportunities in other countries, including Việt Nam.

They have great interest in logistics, particularly cold supply chains, in Việt Nam, Anh said.

Đào Tiến Phong, a lawyer at Investpush Legal, one of the leading law firms in Việt Nam in terms of providing incorporation and other legal services, said his company recently served a number of funds and other investors who came to consider investment opportunities in sectors such as distribution, healthcare and education.

To further attract foreign investors, especially those with long-term investment strategies, speakers at the conference called on the Government to improve policies and mechanisms to stimulate mergers and acquisitions and ease the way for divestment of stakes.

In addition, it is necessary to have measures to shorten the time needed to complete a deal.

Firms need to integrate environmental, social and governance (ESG) in their operations since it is gaining importance in M&A activities globally, Anh said.

Speakers agreed that businesses need to clearly determine their M&A goals and the partner’s strengths and expertise.

Before starting off, Vietnamese companies should conduct thorough market research, financial due diligence and legal assessments, and consider cultural and regulatory factors that could impact the deal, they said.

Minh Huỳnh, director of investment fund Tael Partners, said: “Financial planning for a business, like financial planning for one's life, needs to take into account both advantages and disadvantages.

“When we think about raising capital, it is necessary to ask: Why do we need to raise capital? What do we need from investors? Capital? Technology? Management?

“The second question is when investors come to us, how will our company change, how will we manage it, and what will we expect? We must answer all of those questions before asking investors to contribute capital.”

Senior economist Phạm Chi Lan said: “Looking for new investors, including foreign investors, is what Vietnamese businesses need, but what is more needed is good macroeconomic policies so that businesses can easily access foreign capital.” — VNS