Korean conglomerate SK Group has invested 1 billion USD in Vingroup. In the photo Vingroup's Landmark 81 in HCM City, the highest building in Vietnam. (Photo courtesy of Vingroup)HCM City (VNS/VNA) - Despite the slowdown inglobal deal-making due to ongoing worldwide economic uncertainty, Vietnam remainsactive in M&A in 2020, according to a new report by Baker McKenzie.
The firm’s fifth annual Global Transactions Forecast, jointly releasedwith Oxford Economics, projects that mergers and acquisitions (M&A) willdecline globally from 2.8 trillion USD in 2019 to 2.1 trillion USD in 2020. Theforecast also predicts a downward trend in IPO proceeds from an estimated 152billion USD in 2019 to 116 billion USD, a 23 percent drop.
For Vietnam, the forecast expects GDP growth may ease over the next 18 months,due to export growth trends declining amid lower Chinese import demand andincreased global protectionism. Currently, Vietnam’s average annual GDP growthof 6.2 percent is higher than the global average of 2.8 percent.
Baker McKenzie expects cross-border acquisitions to dominate M&A deals inthe coming years, as the country’s solid social economic fundamentals continueto attract overseas investors. “Vietnam remains active in M&A rightnow, due to positive market factors and confidence that help create business opportunities,as well as multilateral agreements that continue to prompt regulatoryreform,” said Seck Yee Chung, who heads Baker McKenzie’s M&A practicein Vietnam.
Vietnam, Thailand and Indonesia were identified in the report as Asiancountries that saw strong inbound activity in 2019. This year’s largestcross-border signed inbound deal in the country was the Republic of Korea'schips-to-energy conglomerate SK Group's 1 billion USD investment in Vingroup –Vietnam’slargest firm.
This was followed shortly by RoK-headquartered Hana Bank’s purchase of a 15 percentstake in the Bank for Investment and Development of Vietnam (BIDV) worth 850million USD. The RoK is the largest source of foreign direct investment inVietnam, as the latter has become a production base for major Koreanmultinationals such as Samsung and LG.
Despite continued interest from investors, Vietnam may experience a decline inM&A, as total transactions will dip from 2.6 billion USD in 2019 to 1.7billion USD in 2020, a 35 percent decrease. In IPOs, the report did not postany estimates for 2019-2020.
Looking ahead, the report predicts that activity will pick up again post-2020,as Vietnam remains an attractive market./.
VNA
