M&A value reaches $5.4 billion in seven months

Update: July, 24/2019 - 08:18


Speakers at the conference to introduce the Vietnam M&A Forum 2019 on Tuesday. The event is expected to take place on August 6 in HCM City. — Photo courtesy of the event organiser

HÀ NỘI – The value of the merger and acquisition (M&A) deals in Việt Nam reached US$5.43 billion in the first seven months of this year, according to data released on Tuesday by the AVM Vietnam, a co-organiser of the Vietnam M&A Forum 2019.

The figure included the $885 million equity purchase of South Korean KEB HANA Bank for 15 per cent stake of the Bank for Investment and Development of Vietnam (BIDV) announced on Monday.

Since 2018, Việt Nam has emerged as a big M&A market in the Southeast Asian region with many big value deals. Total M&A value last year reached $7.64 billion, down 25 per cent compared to 2017’s record value of $10.2 billion. However, if excluding the $5 billion deal of ThaiBev’s purchase of Sabeco’s equity in 2017, the 2018’s M&A value still increased by 41.4 per cent year-on-year.

Đặng Xuân Minh, general director of AVM Vietnam, said foreign investors were seeking opportunities in the consumer goods manufacturing and real estate industries in Việt Nam to capitalise on the huge market of more than 96 million people.

“At a Bloomberg’s investment conference in Thailand recently, many foreign investors expressed their keen interest in Việt Nam’s market and want to seek opportunities here,” Minh told the meeting to introduce the Vietnam M&A Forum 2019 on Tuesday.

Their interested industries included consumer goods, retail, real estate, education and logistics, Minh said, but also pointed out the obstacles which may hinder foreign investment, including slow state-owned enterprise (SOE) equitisation process, high State holding ratio in equitised companies, overvalued assets and the lack of transparency and English proficiency in Vietnamese firms.

Minh predicted the M&A value could reach $6.7 billion by year-end, but left open the possibility of higher value if appearing big deals like KEB HANA Bank in BIDV.

Michael DC Choi, deputy general director of Korea Trade Investment Promotion Agency (KOTRA) told Việt Nam News valuation was one of the biggest obstacles to seek investment in small companies in Việt Nam.

“There’s no clear standard to value the company properly. You have to trust and take all risks in the deal,” he said.

After a decade of strong growth, Việt Nam’s M&A market value reached nearly $50 billion and is predicted to enter a new era with various opportunities.

Deputy Minister of Planning and Investment Võ Thành Thống said Việt Nam was promoting M&A activities in tandem with SOE equitisation in various sectors like transportation, infrastructure, food, agriculture, telecommunications, trade, services and tourism.

Thống said recent new policies such as the draft amendments and supplementations to some important laws (the Law on Investment, Law on Enterprises and Law on Securities), the draft resolution on attracting new-generation foreign investment and newly-signed free trade agreements would help lure more investment, including M&A deals.

He said the Politburo for the first time would issue a separate resolution on attracting foreign investment in the future.

Meanwhile, Lê Trọng Minh, chief editor of Vietnam Investment Review, the event organiser, said Việt Nam also faced challenges from domestic and international factors such as rising trade tension in the world, slow equitisation and divestment of state-owned enterprise and modest local market value.

The 11th annual Vietnam M&A Forum 2019 themed “Going for breakthrough” will take place in GEM Conference Centre in HCM City on August 6. The forum would assess the M&A trends in the next few years, analyse new capital flows, opportunities and driving force for M&A in Việt Nam, Minh said. — VNS