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Foreign investors opting for slow courtship of Vietnamese companies
Foreign investors now have opportunities to purchase Vietnamese businesses at very low prices. However, it seems that they are not rushing to make deals.
Vietnamese enterprises want cash
The current difficulties have forced Vietnamese enterprises to sell their companies to foreign investors at very ‘soft’ prices.
Pham Phu Ngoc Trai, Chairman of Pepsi Co Vietnam, and also a member of the management board of several other companies, said that previously, four or five foreign investors wanted to buy one company, while nowadays, every foreign investor has ten choices.
In general, the current difficulties of Vietnamese enterprises benefit foreign investors in negotiations. Vietnamese enterprises nowadays dare not ask for overly high prices as they did in the past.
As businesses cannot access bank loans, they need cash from foreign investors and will accept selling stakes at ‘soft prices’. Directors of several foreign investment funds also said that this is a golden opportunity to buy stakes of unlisted companies.
Real estate firms prove to be the ones that most need capital nowadays. As commercial banks have tightened real estate credit, the firms are facing the risk of having their projects revoked.
New deals have been announced. Japanese Sumitomo Mitsui Banking Corp purchased 15% of stakes of Eximbank at $225mil, while BankInvest has decided to inject $9.6mil in ICP. In fact, the negotiations kicked off a long time ago, while the deals have just been announced.
A big automobile manufacturer has reached an agreement on selling 20% of its stakes to a foreign investor. However, the deal will not be announced until all steps of the deal are wrapped.
Most foreign investors are still optimistic about Vietnam, which explains why they still inject money in Vietnamese businesses despite the current difficulties.
General Electric has got a licence to set up a finance company, GE Money. It has also got a licence to set up a factory that makes accessories for electronic generators.
ANZ has reached agreement in principle to set up a 100% foreign owned bank. Though it will take much more time to get the official licence, ANZ still plans to open four new branches, which shows its determination to expand its market share.
Foreign investors not in a hurry
Though foreign investors know well that there is now a golden opportunity for them to purchase Vietnamese businesses, they aren’t rushing to make deals.
General Director of Berjaya Vietnam, a Malaysian company, Nguyen Hoai Nam, specialising in real estate investments, said that foreign investors are cautious when conducting negotiations due to the current difficulties of the national economy, while the demand for purchasing businesses is decreasing with very few buyers.
Nam said that foreign investors are only eyeing potential lucrative business fields like retail, tourism, finance services and real estate.
VNN
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