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Developing Vietnamese M&A Trends

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Current Vietnamese M&A Trends

Vietnamese M&A trends are the subject of much excitement and discussion as we progress into the 2019 financial year. Vietnam is one of the fastest growing markets in Asia, with a vibrant economy and a young, driven and enthusiastic workforce. As with any upwardly mobile economy, the size of the mergers and acquisitions market is also growing. The Audit, Tax and Advisory service KPMG, found that this outstanding vibrancy has caused the M&A market to double in transaction value, from US$4 billion in 2013 to US$8.6 billion in 2017.

Vietnam has many advantages over its competitors. The aforementioned thriving economy is backed up by the country’s participation in many free trade agreements around the globe. Its geographical location at the heart of Southeast Asia coupled with excellent sea and air routes and inexpensive local labor rates, make it a prime player. Vietnamese M&A Trends have never been better. It is now well recognized as an extremely important manufacturing hub; for example, the country is responsible for the manufacture of 240 million mobile phones annually for Samsung, alone. 

The country has a growing local consumer market and the quality of the investment market has improved markedly in recent years. In just five years it has risen from a ranking of 91st in the world to 55th, placing it above six European countries. In fact, the website US NEWS named it as 8th in the world’s best countries in which to invest.

Vietnamese M&A Trends in Recent Years
 

In recent years Vietnamese M&A Trends have covered different areas of the business world. In May 2017, Earth Chemical bought the A My Gia Joint Stock Company for about USD79.2 million. Whilst in the same year Vietnam International Joint Stock Commercial Bank bought the Ho Chi Minh City branch of the Commonwealth Bank of Australia. In addition, Shinhan Bank Vietnam acquired ANZ Bank's retail business. There were also many notable acquisitions in the F&B, Real Estate and Insurance sectors. 

Where do Vietnamese M&A Trends go from Here?

Continued relaxation of laws that used to prohibit foreign ownership in Vietnam, is giving cause for experts and analysts to be bullish when it comes to where Vietnamese M&A trends are heading. This coupled with the signing of important international trade deals, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), all augers well for the future. According to the Hanoi Times, the M&A value in 2019 is expected to continue its impressive growth. 
International law firm Baker McKenzie recently released their Global Transactions Forecast Report. In it, they say, “M&As in Vietnam and India will benefit from important policy reforms, which should make inbound investment more attractive.” The report continues, “We forecast total M&As in the region to rise to $751 billion in 2019. But as in other parts of the world, growth is slowing, meaning equity markets and deals are likely to take a pause in 2020. A modest upturn in growth in 2021 and the stabilization of global liquidity conditions point to a cyclical deal upturn the following year.” Again all pointers are indicating a very good future for Vietnamese M&A trends.
The government is keen to assist in any way possible and has earmarked up to 140 State-Owned Enterprises (SOEs) to be sold before the end of 2020.  Continued support of the stock market and incoming investors is also a positive sign. 
Whilst legal and governance barriers together with a lack of market transparency are cited as the greatest concerns for investors, it is safe to say that M&A deals in Vietnam will continue to be one of the most effective channels for market entry.
 
The major expected Vietnamese M&A trends include Banking; Real Estate; the growth of Japanese and Thai investment; and the continued reform of SOEs.

Summary

Whilst the equitization of state-owned enterprises (SOEs) is lagging behind forecasts, it is nonetheless driving forwards. It is true that only 12 SOEs were equitized throughout 2018 and the remainder were delayed until 2019 and beyond. But there seems to be genuine confidence now to make this happen. A proposal for the State to hold a stake of more than 36% or 50% in these entities is due to go before the Prime Minister for approval*. More than 4,350 M&A deals totaling US$48.8 billion have been carried out in Vietnam in the decade since 2009. In short, the future is looking very good indeed. 

Among the many factors driving Vietnamese M&A trends are:
* The reformation of policies designed to increase and encourage foreign investment.
* The successful negotiation and signing of trade agreements including the joint EU/Vietnam FTA and The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP)
* Continued work on the ASEAN economic single trading market
* Continued growth in Vietnam’s already substantial middle-class, which is sure to drive the already blossoming Vietnamese economy. 
There has never been a better time to move to Vietnam. To register a vacancy here or to see the many top positions that are available, contact us at RGF Executive Search

About the Author

Keith Hancock
Following a highly successful 25-year career as a singer/songwriter and musician, Keith pulled out of the rat race and moved to Southeast Asia in 2008. First living in Thailand, he moved to Cambodia and then relocated to Ho Chi Minh City in early 2013. 

Keith has had work published in magazines and websites in the UK, Europe, USA, Australia, and Asia. He has written for the BBC and has appeared on TV and radio in many different countries. His great loves are music and travel, but he writes on a whole range of subjects.

Source: 

1. Pursuing M&A in Vietnam

2. 50% of Samsung Mobile Phones Made in Vietnam

3. Best Countries to Invest In

4. Vietnam’s M&A market forecast to thrive in 2019

5. State-owned enterprise equitization process lags behind schedule