Việt Nam’s merger and acquisition (M&A) market is seeking a big push as signs of a deceleration have crept up this year. — Photo tinnhanhchungkhoan.vn

HÀ NỘI — Việt Nam’s merger and acquisition (M&A) market is seeking a big push as signs of a deceleration have crept up this year.

M&A deals in Việt Nam hit an all-time record of US$5.8 billion in 2016, a growth of 11.92 per cent compared to 2015’s value, according to a report released at a press meeting to launch the M&A Forum 2017 on Thursday.

However, the market has seen a slowdown since the latter half of last year with fewer stellar deals. The total value of M&A deals reached just $1.1 billion in the first quarter of this year, down 24.4 per cent year-on-year.

According to the latest research by the M&A Forum 2017, the domestic M&A market will likely not surpass 2016’s peak without a breakthrough.

“This will require a big push from the Government and businesses to boost M&A activities to grow stronger in both quantity and quality,” said Lê Trọng Minh, editor-in-chief of Vietnam Investment Review, organisers of the M&A Forum 2017, scheduled to be held in HCM City on August 10.

M&A activities in 2017 will face challenges of rising competition in drawing foreign capital between Việt Nam and regional countries and a slowdown in State-owned Enterprises (SOEs)’ equitisation process, as well as the low quality of Vietnamese companies and small scale of the economy.

The Government’s latest report showed that the progress of SOE equitisation has not kept up with the Government’s and investors’ expectations.

Only 52 SOEs were equitised in 2016, equivalent to 25 per cent of the number recorded in 2015. In the first half of this year, the number was just 20, down 24 per cent from the same period last year.

Việt Nam’s M&A market value is small in comparison with other ASEAN countries such as Singapore with total M&A value in 2016 hitting $62.3 billion; Indonesia, Thailand and Malaysia around $11-16 billion.

In terms of deal values, most M&A deals in Việt Nam were small with over 64 per cent valued below $20 million.

Foreign capital continued to play a dominant role in executing stellar deals with sizes of between $20-100 million. For example, Thailand’s Central Group spent $1.05 billion to acquire Big C Việt Nam from the Casino Group, and TCC Holdings purchased the entire chain of Metro Vietnam Cash & Carry for $800 million.

Overseas investors accounted for roughly 77 per cent of the total value of M&A deals in Việt Nam in 2016. Asian companies continued to lead the market in terms of the number and value of the deals with Thailand, Singapore, South Korea, Japan, mainland China and Hong Kong being the top five buyers in Việt Nam.

Retail, consumer goods and real estate sectors were the most attractive ones for M&A activities, especially deals in the retail sector accounting for 38.5 per cent of the total value in 2016.

Two scenarios for M&A Việt Nam 2017

The working group of the M&A Forum 2017 provides two scenarios for M&A activities in 2017, of which the conservative ratio predicts the total value of M&A deals to reach around $5 billion this year, down 14 per cent from 2016.

In the optimistic scenario with a breakthrough from SOEs equitisation, total value could reach $6.2-6.5 billion or higher, equivalent to a growth of 6.5-10 per cent.

State divestments from big companies such as Sài Gòn Beer-Alcohol-Beverage Corp (Sabeco), Hà Nội Beer Alcohol and Beverage JSC (Habeco), Petrolimex, Vinamilk and MobiFone are on the investment radar for both foreign and domestic investors.

In 2017-18, M&A deals will continue to focus on retail, consumer goods and real estate. In addition, telecommunications, energy and infrastructure are expected to emerge and see some big deals.

Vietnam M&A Forum 2017

Vietnam M&A forum 2017, an annual event of mergers and acquisitions for companies and investors from Việt Nam and other countries, will take place at GEM Conference Centre in HCM City on August 10.

The event has been co-organised by Vietnam Investment Review (VIR) and AVM Vietnam since 2009 under the sponsorship of the Ministry of Planning and Investment. Under the theme “Seeking a big push”, the forum will be the platform to exchange suggestions, introduce opportunities and share experiences to create a breakthrough in the market this year.

About 30 international and Vietnamese guest speakers and 500 senior leaders from investment funds, Vietnamese and international corporations are expected to participate in the event. — VNS