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Investors ponder Vietnam’s merger and acquisition potential
Interest in merger and acquisition deals high but investors unsure how to negotiate the maze of rules and regulations
Merger and acquisition (M&A) opportunities in Vietnam look promising but the government’s transaction regulations were confusing, foreign investors and analysts told a seminar in Ho Chi Minh City Thursday.
Statistics from the Foreign Investment Department show there were 1,092 acquisition deals completed last year.
The acquisitions included: Sumitomo Mitsui Banking Corporation’s US$225 million bid for a 15 percent stake in Vietnam Export and Import Bank (Eximbank); French insurer AXA’s 50 million euro (US$82.3 million) bid for a 16.6 percent stake in insurer Bao Minh; Australian Qantas Airway’s $50 million bid for a 30 percent stake in Pacific Airlines; and Goldman Sachs’ bid for a 30 percent stake in diaper and napkin maker Diana.
PricewaterhouseCoopers Vietnam Transaction Director Stephen Gaskill said the number of m&a deals in Vietnam rose rapidly in the first three months of the year, with the value of transactions up to $302.3 million.
Gaskill said the outlook for Vietnam’s m&a activity remained positive despite the value of transactions slipping to $44.1 million in the second quarter.
“The decline came in wake of the fact that not many m&a deals in the second quarter were announced in the media,” he said, adding that many notable deals will be revealed later this year.
But he said there were still many hindrances for foreign m&a deal makers in Vietnam.
Gaskill said major stumbling blocks included a lack of understanding of local business culture by foreign investors and a dearth of publicly available information.
He said foreign companies often encountered difficulties when trying to set up investment holding firms in Vietnam.
Many foreign investors also complained at the event the government’s m&a regulations were too complicated and some even contradicted each other.
Investors said they should be entitled to own a 99 percent stake in a listed company under the country’s World Trade Organization (WTO) commitments.
However, the government still limited foreign ownership to 49 percent of a joint stock enterprise and 30 percent of a listed bank.
Vietnam International Law Firm Hong Duc Director Tran Anh Duc said foreign players could make transaction in dong, gold or another foreign currency under Vietnam’s Enterprise Law.
But the Ministry of Finance, in contrast, said in a circular that foreigners had to conduct transactions in dong.
Participants at the seminar also said “confusing” valuations of enterprises often hindered m&a deals.
Ministry of Planning and Investment’s Legislation Department Director Pham Manh Dung said the ministry was drawing up a new decree on m&a.
Thanhnien
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