M&A boom building up steam in Vietnam

A rise in both the number and the value of mergers and acquisitions (M&As) in Vietnam last year and early this year have signaled that M&As are booming in the country.
A rise in both the number and the value of mergers and acquisitions (M&As) in Vietnam last year and early this year have signaled that M&As are booming in the country.

According to auditing firm Pricewater House Coopers (PwC)’s statistics, there were 295 M&As worth a combined 1,138 million USD in the country last year, up 77 percent over the previous year.

In the first quarter of this year, the market was more ebullient with larger acquisitions: the Vietnam Industrial and Commercial Bank (Vietinbank) sold 10 percent and 15 percent of its statutory capital to the International Finance Corporation (IFC) and Canada ’s Nova Scotia Bank respectively, and VNPT Global sold 10 percent of its shares to the Singapore Technologies Telemedia (ST Telemedia).

Notably, the Hung Vuong Fishery Joint Stock Company (HVG) offered to buy 3.75 million shares of the An Giang Fishery Import-Export Joint Stock Company (AGF) in a bid to raise its share in AGF to 51 percent. This is the first time a firm listed on the country’s stock market has asked to buy shares of another listed firm publicly.

Although M&As were introduced in Vietnam in 2000, the activity has rapidly grown just over the past few years, mostly in the form of sales of shares and transfers of capital between foreign-invested and domestic enterprises or among domestic firms.

M&As have helped such businesses acquire more investment capital and expand the scale of their operations, as well as to increase their market share, reduce competitive pressures, and gain access to new technologies, said trade experts.

According to them, M&As enable small domestic enterprises that are not competing strongly to ward off the risk of bankruptcy and face fewer rivals. At the same time, foreign-invested enterprises can gain access to the Vietnamese market through M&As.

However, the trade experts reckon that insufficient legal foundations still the largest hurdle for M&A activity in the country.

In addition, a lack of experience and knowledge, as well as professional brokers, lawyers and consultants, in the field remains an obstacle, they added.

The Vietnam Competition Authority under the Ministry of Industry and Commerce have forecast that the M&A market in the country will grow by 30-40 percent annually in the coming years and take place mostly in industry and financial services as the two sectors are developing quickly and have considerable untapped potential.

Several sectors, such as telecommunications and mining, are also predicted to see M&A activity this year.

A forum on the subject is scheduled to take place in Ho Chi Minh City at the end of May. The event, jointly held by the Dau Tu (Investment) newspaper and the Vietnam Avelue Consultancy Company under the umbrella of the Ministry of Investment and Planning, is titled “Looking towards successful M&As”.

The forum is expected to be a good chance for businesses to share experiences in seeking strategic partners in M&As and make predictions on the market trends this year and in the years to come./.

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