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M&As top of the pops
Vietnam’s mergers and acquisitions market is expected to be more vibrant thanks to a raft of simplified legal procedures.
The latest Stoxplus report showed that in 2013’s first quarter, the mergers and acquisitions (M&A) market reached $675.6 million, with 14 deals recorded, including 10 foreign-backed and four domestic M&A deals.
Some typical M&A cases in the first quarter included American-based KKR investment fund increasing its ownership in Masan Consumer from 10 per cent to 18 per cent, with additional value of $200 million, Mekong Capital withdrawing 6.7 per cent equity at Mobile World Joint Stock Company for a financial investor with $110 million and Vingroup transferring Vincom Center A Commercial Hotel Complex in Ho Chi Minh City to VIPD worth $470 million.
“From this time until the year end and next year, the market will be busier because of the trend to shift from direct investment to indirect investment via M&As,” said Nguyen Quang Thuan, general director of Stoxplus.
He said local businesses offered attractive prices for foreigners because of Vietnam’s struggling economy and legal barriers to the M&A process had been loosened, especially in the banking sector with the government easing restrictions for foreign ownership in some weak banks.
According to Stoxplus, M&As in the banking sector would be more vibrant due to its restructuring roadmap, as the number of commercial banks would be reduced from 39 to 13-15 by 2017.
Recently, the government considered raising the foreign ownership limitation to above 30 per cent, with Saigon Commercial Joint Stock Bank (SCB) as a pioneer. Among the 39 current joint stock commercial banks, 15 have strategic partners in the same sector, three banks stay in special supervision or have less demand for merging or transferring.
Consumer finance M&As are also predicted to be busy after the government allows domestic and foreign financial institutions to merge or equitise with retail bank, with the merger of PVFC and Western Bank a typical case.
Robert Tran, a senior executive of Robeny Group - a Canadian consultancy firm, said he expected M&A deals to occur in the food and beverage sectors, pharmaceuticals, breeding food and education. “Currently, we receive requirements from U.S and Canadian companies seeking pharmaceutical factories to process commodities in Vietnam and ASEAN markets,” said Tran.
Currently, Japanese firms remain at the top of foreign-backed M&A in equity investments into Vietnam enterprises. Besides some significant deals, Japanese investors have been searching for investment opportunities in niche markets with small and medium target enterprises.
To reflect the trend and contribute to enhancing the efficiency of M&A activities in Vietnam, since 2009, VIR and AVM Vietnam have initiated the annual M&A Vietnam Forum.
The Vietnam M&A Forum 2013 will be held on August 8, 2013 in Ho Chi Minh City.n
Since 2009, the forum has become the biggest annual event on M&A and strategic investment in Vietnam. The forum is expected to welcome leaders of Ministries, sectors, experts, leading financial enterprises, M&A consulting companies, hundreds of other Vietnamese and foreign enterprises and the media.
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