HÀ NỘI – Việt Nam’s M&A market is forecast to reach US$6.5-$6.9 billion in 2018, which is lower than the 2017’s record of $10.2 billion.

“We expect the M&A value in 2018 to decline from 2017, as this year may not have as big deal as Sabeco,” said Đặng Xuân Minh, AVM Vietnam’s CEO.

Việt Nam’s merger and acquisition (M&A) market hit over the 10-billion-dollar landmark for the first time last year and is at the turning point to reach a new era of opportunities in the next decade.

M&A value continued to rise 55 per cent year-on-year to reach US$3.55 billion in the first six months of this year.

“One year ago, even very optimistic forecasts hardly envisaged the M&A boom in 2017 which thrust the Việt Nam’s M&A value to $10.2 billion, a growth of 175 per cent over 2016. This is a record number, far surpassing previous forecasts,” said Lê Trọng Minh, editor-in-chief of the Việt Nam Investment Review (VIR).

Minh was speaking at a press conference on Monday introducing the Việt Nam M&A Forum 2018 themed “New thrust, new era” which will take place on August 8 in HCM City.

Nearly 4,000 M&A deals with total value of $48.8 billion have been executed in the past decade. The market size in 2017 increased by nine-fold against 2008, of which the record deal of the decade was $4.8 billion ThaiBev (Thailand) paid for a 51-per-cent stake in Sài Gòn Beer-Alcohole-Beverage Corp (Sabeco).

Though this value is still modest in comparison with Singapore ($62.3 billion in 2016) and Indonesia, Thailand and Malaysia ($11-16 billion), Việt Nam’s M&A activity has grown tremendously in both quantity and quality.

It is an effective capital mobilisation channel, which contributes to the country’s economic reform and helps enhance competitiveness of Vietnamese businesses.

The M&A boom in 2017 and first half of 2018 was fueled by the initial public offerings (IPO) of big enterprises as well as encouraging economic policies, which will remain the driving force for the market in the next decade, Minh said.

Only 8 per cent of State capital in State-owned enterprises has been sold, among them were record sales at Sabeco and Vinamilk.

According to Nguyễn Thế Phương, Deputy Minister of Planning and Investment, the process of economic integration and restructuring has accelerated SOE equitisation as well as the development of private sector and foreign investment, opening up more M&A opportunities in Việt Nam.

However, he also pointed out some challenges to the M&A boom in the next period, including the rising protectionism, trade war (especially between the United States and China), geopolitical tensions and decelerating growth in big economies.

New trends

In a prudent scenario (without big deals), Việt Nam’s M&A value will maintain at more than $5 billion for four consecutive years since 2015. However, to boost the market to a new high, it needs stronger moves by the Government and businesses, Minh said.

In 2018, M&A deals are expected to continue focusing on consumer goods, retail and real estate. In addition, the fields of telecommunications, energy, infrastructure, pharmaceutical and education will also be on radar of investors.

In 2017, the sectors with the highest M&A value were consumer goods (57 per cent), real estate (27 per cent), finance-banking (4 per cent) and chemicals (3 per cent). However, in the first six months of 2018, the leading sectors shifted to real estate (66.8 per cent), finance-banking (19.1 per cent) and industrial production (9 per cent).

The 10^th Việt Nam M&A Forum 2018, co-organised by the Vietnam Investment Review and AVM Vietnam under the Ministry of Planning and Investment, will review the 10-year journey to assess the M&A trends in the next few years. The event will also announce awards to honour the best deals, best advisory firms of 2017-18 and the deal of the decade. – VNS