Local companies start to assert themselves in mergers and acquisitions market

Friday, Dec 10, 2021 14:39

Speakers at the 13th Vietnam M&A Forum titled ‘Time to Strike’ in HCM City on Thursday. — VNS Photo Bo Xuan Hiep

As Viet Nam’s economy continues to grow, local players will play a major role in mergers and acquisitions (M&A) activities, creating more firms comparable with regional giants, a conference heard in HCM City on Thursday.

Speaking at the event, the 13th Viet Nam M&A Forum, Deputy Minister of Planning and Investment Tran Quoc Phuong said the M&A market had grown significantly in terms of both value and number in the last three years, mostly driven by Vietnamese firms.

“The country is seeing huge changes in its M&A landscape with local enterprises playing a key role in the market.”

In the first 10 months of this year M&A transactions rose by 17.9 per cent year-on-year, and 13 per cent from the same period in 2019, to US$8.8 billion, he said.

In the past they were largely driven by foreign investors, especially from Thailand, Singapore, Japan, South Korea, and Taiwan, but the market is seeing a shift towards local players who are becoming more and more active.

In the first 10 months Vietnamese businesses accounted for more than $1.6 billion worth of transactions.

Many are using M&A as a key tool to support their expansion efforts.

Vingroup, Masan Group, Hoa Phat, Vinamilk, and Nova Group were among the five biggest acquirers in terms of both transaction value and numbers in the last two years.

Last year they accounted for $1.21 billion, or 53 per cent of all deals by Vietnamese players, with several blockbuster deals.

At the same time the pandemic has made foreign investors adopt a more conservative approach, especially since site visits have been very difficult.

Promising M&A market

Experts said the Vietnamese M&A market had put up an astonishing performance amid the COVID-19 resurgence.

The country’s rising attractiveness as an M&A destination had become evident not only by the increase in transactions but also average deal size, they pointed out.

The average size of transactions whose values were disclosed increased from $28.1 million in 2019 to $42.8 million this year.

Twenty two deals worth over $100 million were concluded in the first 10 months of this year compared to 19 in the whole of 2019. More deals of similar size are expected to be announced by the end of this month.

Viet Nam’s economic stability has been backed up by the Government’s pandemic prevention measures, continued efforts to attract foreign investment and robust consumption driven by domestic demand, according to experts.

The M&A market has also proven to be very resilient, even picking up in 2021 and promising to do so in the years to come.

M&A helps local corporations quickly gain access to new business areas, capture bigger market shares and acquire talent and expertise.

In the past Vietnamese companies did not have enough resources to do large deals, but that gap has become narrower with the emergence of local players of scale and the growth of the local financial market.

Experts said domestic investors are getting familiar with the practices and processes of deal making, and are engaging legal and financial advisors and doing thorough due diligence in financial, tax and operational aspects.

They said local players should continue to develop and strengthen the value chains of their business, and to diversify revenue and profit sources to withstand headwinds in the market.

Le Trong Minh, editor-in-chief of the Vietnam Investment Review newspaper and head of the conference organisation committee, said: “The pandemic has created not only challenges but also huge opportunities for Vietnamese businesses.

“While M&A activities in the country are not as vibrant as in previous years, with improved investment policies and international integration, the M&A market is expected to see large deals in the coming years.”

The annual forum, titled ‘Time to Strike’ this year, attracted 500 local and foreign delegates. — VNS

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