Nearly 5,000 deals involving foreigners buying into Vietnamese businesses have been reported so far this year, an increase of 50 percent compared with 2017.
The Foreign Investment Agency’s (FIA) report shows increasingly high interest of foreign investors in Vietnamese businesses with $5.28 billion worth poured into businesses through 4,551 deals since the beginning of the year.
In August alone, foreign investors bought into 1,200 projects worth $490 million. Meanwhile, from January to July, foreign investors poured capital into 476 projects each month under this mode. The capital contributors are mostly from Asia, including Thailand, Singapore, Japan and South Korea.
Analysts commented that buying into Vietnamese businesses is the quickest way for foreign investors to penetrate the market.
Decree 60 raised the ceiling foreign ownership ratio in listed and public companies from 49 percent to 100 percent, which has helped promote M&As.
Meanwhile, Nguyen Tri Hieu, an economist, commented that foreign investors’ move of buying Vietnamese shares showed that they were cautious about the development of Vietnam’s economy. Instead of developing new projects and following complicated registration procedures, investors have bought shares of profitable businesses.
The report also pointed out that the M&A deals made recently were mostly in the real estate sector.
The most outstanding deals included CVH Nereus Pte, a subsidiary of CapitaLand, which bought 16.9 million shares, or 99.5 percent of capital of Hien Duc Tay Ho JSC. The deal worth VND685 billion, or $29.8 million, wrapped up in March 2018.
Public attention was also drawn to the deal of Keppel Land from Singapore acquiring 10 percent of Jencity Ltd shares and the plan to build Saigon Sports City capitalized at $11.4 million.
Expected to cover an area of 64 hectares, the small city would have 4,300 high-end houses and become the “leading ideal living environment” in Vietnam.
Meanwhile, Warburg Pincus, an investment fund from the US joined forces with Becamex IDC to set up a $200 million joint venture to develop a logistics chain and industrial real estate projects.
Commenting about Vietnam’s M&A market, Warrick Cleine from KPMG Vietnam said the market has been growing rapidly with average growth rate of 17 percent per annum.
A report released at the Vietnam M&A Forum showed that real estate projects account for 66.75 percent of M&A deals in 2018. Foreign investors eye projects with a large area and advantageous positions, especially near beautiful beaches.
According to JLL, M&A activities in Vietnam have increased thanks to higher incomes, rapid urbanization and a population structure in which 70 percent are aged between 15 and 64.