M & A in Vietnam

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Last week I attended the annual M & A conference organized by VIR, which was opened by the Minister of MPI, Nguyen Chi Dung, who commented on the need for businesses to improve efficiency and competitiveness, and for the Government to improve the regulatory environment.

As one of the key speakers noted, M & A serves as a catalyst for growth through the transfer of best practices, technology and experience.

The numbers of M & A deals in Vietnam have been steadily growing with a volume of US$ 4.2 billion, in 2014, US$ 5.2 billion in 2015, and US$ 5.8-6 billion in 2016. However, putting this into context of Southeast Asia shows that Vietnam accounted for approximately only 5% of the total volume of transactions which were recorded at US$ 115 billion. Singapore accounted for 54% of the total, mainly because many companies use Singapore to incorporate subsidiaries or SPV’s for holding investments in emerging markets like Vietnam. Therefore, the numbers for true Vietnamese M & A could be considerably higher than the 5% figure.

The most prominent players in Vietnam’s M & A sector have been from Thailand, Singapore, Japan and South Korea. We saw Central Group acquire Big C from the French group Casino for over US$ 1 billion and TCC Holdings from Thailand acquire Metro Cash and Carry.

Singapore Investors were more active in the real estate sector, with the major players being Keppel Land and Capital Land. Korean firms have been active in the food sector, and also acquired the retail banking operations of ANZ bank.

In 2016, almost 50% of M & A or US$ 2.5 billion was in the consumer and retail sectors, US$ 1.1 billion in Industrials and US$ 0.6 billion in Real Estate.

The favorite sectors for M & A going forward are likely to continue to be Consumer and Industrial driven by Vietnam’s emerging middle class, which is expected to grow from 8 million in 2012 to 40 million people by 2020. Other sectors include financial services and digitals.

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