Merger and acquisition (M&A) deals in Vietnam were reported to hit US$9.9 billion in 2018, rocketing 160% from a year earlier, according to Nguyen Van Toan, vice chairman of Vietnam’s Association of Foreign Invested Enterprises (VAFIE).
The figure showed foreign investors’ further confidence in Vietnam and results from the Vietnamese government’s privatization progress, Toan was quoted by Vietnam News Agency as saying.
Toan predicted that the move is likely to continue the upward trend in 2019 as Chinese companies would change their investment portfolios. Chinese enterprises would build more plants and expand their facilities in Vietnam to benefit from the integration commitments within ASEAN plus other countries, and from other free trade agreements that Vietnam has ratified.
M&A activities over the past decade were divided into two periods with the first in 2009-2014 and the second in 2014-2018.
The first period, or the first wave in other word, took place in the context that Vietnam made initial efforts to complete its legal framework for better investment environment. Indeed, some laws namely Law on Enterprises, Law on Investment, and Law on Securities helped investors secure with their investment in a nascent M&A market.
The first wave posted a value worth US$15.15 billion mostly from M&A deals among domestic companies.
The second wave in 2014-2018 recorded US$30 billion worth of M&A deals with the participation of foreign giants which were optimistic about Vietnam’s growth prospects thanks to a firmer legal system and improved business environment.
In 2017, Thai Beverage PCL (ThaiBev) bought a US$4.8 billion stake in Vietnam’s largest brewer Sabeco.
Earlier, Thai Charoen Corporation Group (TCC) spent US$2.43 billion to take 19.06% stakes at Vinamilk. TCC Group also bought Metro Cash & Carry Vietnam from Germany’s investor at a cost of US$879 million.
In another move, Thailand’s Central Group acquired Big C Vietnam for US$1.05 billion. It also bought a 49% stake at Nguyen Kim electronics shopping centers, a 49% stake at Lan Chi Mart and acquired Vietnamese e-commerce platform Zalora.
Meanwhile, Singapore’s Singha Asia Holding Pte Ltd poured US$1.1 billion into Vietnam’s premier private group Masan.
In the finance-banking sector, Japanese Mizuho now holds a 15% stake at Vietcombank, HSBC dealed with Bao Viet, Shinhan acquired ANZ Vietnam and held a stake at Prudential Vietnam, Sumitomo invested in Bao Viet, Lotte and Warburg Pincus poured money into Techcombank.
Yee Chung Seck, who leads the Baker & McKenzie M&A, Pharmaceuticals & Healthcare, and IT/C practices in Vietnam, said that M&A deals would be booming in Vietnam in the years to come, mostly in consumer goods, retails, and real estate.