The boom in Vietnam’s mergers and acquisitions (M&A) market is expected to continue in 2015 and onwards as the government pushes the equitisation of State-owned enterprise (SOE) and M&A becomes trendier among the private business society as a strategy for more sustainable growth, said Nguyen Anh Tuan, Editor-in-Chief of Vietnam Investment Review newspaper.
The buoyant initial public offering (IPO) activities shook up the M&A market last year, which rose by 15 percent from 2013. Average deal values also jumped to 11 million USD per deal compared to 5-8 million three years ago thanks to the increasing interest of financially capable foreign investors who mostly target local large-scale firms.
The retail sector led in M&A deals last year, accounting for 36 percent of the total value. Notable deals included Vingroup acquiring Ocean Mart and renaming it VinMart and a Thai firm buying the Metro Vietnam retail chain.
Meanwhile, US-based Mondelez International Inc paid 370 million USD to purchase an 80-percent stake in the Kinh Do Corporation’s snack business – a highlight of the consumer goods sector.
M&A activities also opened a whole new picture for the domestic banking sector with four M&A deals inked in the first half of 2015, including VietinBank – PGBank, Sacombank – Southern Bank, and BIDV – MHB.
The State Bank of Vietnam targets a 50 percent drop in the number of local commercial banks in the next three years.
According to Director of the Central Institute for Economic Management (CIEM) Nguyen Dinh Cung, the ambitious plan of the government to equitise 432 major SOEs in 2014 and 2015, offering billions USD worth of stake, has opened up huge opportunities for M&A to expand.
Additionally, a number of soon-to-be-concluded international trade agreements, like the Trans-Pacific Partnership (TPP) and the ASEAN Free Trade Area agreements, will welcome more overseas capital to Vietnam to drive up the M&A market.
The government’s recently issued Decree 60/2015/ND-CP on loosening the SOE ownership level and banking restructuring is also expected to give the market another push.-VNA
