|
Securities firms M&A: buyers and sellers on different planes
A lot of investors are looking to buy securities firms, while a lot of securities firms are looking for buyers. However, it seems that sellers and buyers can’t find a common voice.
Analysts have warned that small securities firms will not survive the current difficult period of the stock market, which is forecast to last until the end of the year. Therefore, a lot of securities firms are offering themselves for sale.
Meanwhile, the demand for purchasing securities firms also proves to be very big. Quan Duc Hoang, Chairman and Investment Director of A.I Capital, said that a lot of foreign investors have asked A.I Capital to arrange deals of purchasing securities firms, especially investors from Japan.
“Japanese investors have returned to Vietnam with long-term vision for investment, and they do not expect to make profit until after 4-5 years,” Hoang said, adding that outside the financial sector, Japanese investors and investors from other countries are eyeing farm produce companies.
However merger and acquisition (M&A) experts say that despite the abundance of sellers and buyers these deals are not going through very easily. It is because sellers always demand high prices, while buyers are not hurrying to buy firms at this moment. They are trying to wait a little longer to be able to buy at lower prices.
A representative of a company specialising in M&A services said that an M&A wave once occurred in Indonesia when the country’s market fell. Stakes of companies were sold at prices 0.4-0.5 times higher than face value. Meanwhile, in Vietnam, securities firms now still demand prices 2-4 times higher than face value, though their shares are selling at just 1.5-2 times more than the face value on the OTC market.
It is clear that foreign investors have more demand to buy securities firms than domestic investors. Foreign investors have reaped big successes in many other stock markets, which once experienced difficult days like Vietnam is now witnessing.
Hoang said that 20% of the nearly 100 licenced securities firms now are looking for buyers. However, no firm is offering to sell urgently at any price. The firms are still looking for suitable buyers and negotiating for the best prices.
Securities firms are experiencing the most difficult days in their history of operation. A lot of securities companies have had to cut expenses by cutting jobs, sacking agents in charge of receiving orders from investors.
Analysts say that securities firms are incurring the loss of VND200mil at least every month. With the loss, big securities firms are still trying to hold out until the situation becomes better, while small firms, which have the chartered capital of less than VND50bil, will not survive.
The analysts say that of this VND50bil, at least VND10bil has been spent on material facilities and information technology. Moreover, they have to spend big sums of money to lease premises and attract qualified staffs. Meanwhile, they do not have sources of income in the context of the market’s falls.
“Vietnam’s stock market remains quite small with few commodities, while there are a lot of operational securities firms. This has led to the M&A wave when the market witnesses the downturn,” an M&A expert said.
He added that securities firms with professional management skill surely don’t need to sell themselves. The firms offering themselves for sale now are mostly the ones with less than VND100bil in capital and poor management skills.
Chairman of TNK Capital, a M&A consultancy firm, Nguyen Quoc Toan, said that it is not easy for securities firms to find buyers due to the personnel problems of securities firms. Meanwhile, if they buy the firms, foreign investors will have to pay off the heavy losses incurred by the firms.
However, in general, Toan believes that it is now the best time to buy securities firms.
VNN
|
