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Billions of dollars are waiting to be poured into Vietnam through mergers and acquisitions (M&A). Experts predict that big deals could be closed in 2021.
50 billion dollars
“It can be said that after more than a decade of strong growth with thousands of transactions and a total transaction value of almost 50 billion dollars, the M&A market in Vietnam has entered a new stage with many new opportunities. The Covid-19 epidemic had a negative impact on the global economy, causing the M&A market to slow down, even deeply shrink, “said Le Trong Minh, editor-in-chief of the Investment Newspaper, director of the Committee. Forum organizer evaluate.
In the Vietnamese market, the total value of mergers and acquisitions in 2019 reached 7.2 billion dollars, which is equivalent to 94.7% compared to 2018. Regarding the activities of mergers and acquisitions in 2019, although the value decreased, there are still positive factors.
In the last 6 months of 2019, many great deals appeared with the participation of foreign investors and private corporations. Normally, the merger and exchange of shares between VinCommerce and VinEco with Masan Comsumer (Masan Group), KEB Hana Bank (Korea) acquires 15% of the share capital of BIDV …
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| Great offer on the market in 2019 |
As for the investment agreement, the most prominent is the $ 878 million agreement between KEB Hana Bank and BIDV in 2019, the purchase of Vinhomes shares of KKR & Temasek for $ 652 million … Meanwhile, the commercial Mergers and most prominent acquisitions in 2019-2020 involved private Vietnamese corporations, generally Masan, Thaco, Gelex, Vinamilk.
Due to the impact of Covid-19 and other factors, the value of mergers and acquisitions in 2020 is expected to continue to decline, estimated at $ 3.5 billion (equivalent to 48.6% compared to 2019).
However, Vietnamese investors and companies still believe in the resilience of the M&A market in the post-Covid period. The market may recover to $ 4.5-5 billion in 2021 before recovering stronger thanks to new deals, as well as many large divestments made by the state after 2021.
In the case of favorable political conditions, the economic environment, coupled with the recovery of the global economy, the accumulation of investment opportunities in 2019-2021 could be released in 2022. The market is likely to experience a rebound in a V-pattern or in a pattern of bird wings. The value of mergers and acquisitions in 2022 in Vietnam is forecast to reach $ 7 billion.
Recently, Korean investors have been actively engaged in M&A activities. Some notable deals in the first 9 months of this year, such as SK Investment III (a subsidiary of SK Group) received more than 12 million shares, equivalent to almost 25% of the shares of Imexpharm Corporation; Lotte Chemical (under Lotte Group) acquired VinaPolytech Company; GS Caltex spent 39 billion dong (nearly $ 1.7 million) to buy a 16.7% stake in VI Automotive Service (VietWash’s parent company) …
Thai investors continue to have M&A deals in the Vietnamese market in the manufacturing sector, in particular the acquisition by Stark Group of Thinh Phat and the electrical cable company Dovina, the acquisition of the company by SCG Group . Well Hoa Packaging …
The premise for the year 2021 “boom”
Sharing at the press conference on the eve of the 12th Vietnam Mergers and Acquisitions Forum in 2020, hosted by Investment Newspaper and AVM Company, Mr. A Remarkable Number: The Value of M&A Deals Between Investors foreign and domestic companies is only 40% compared to last year. The number of deals was also reduced by 50%.
The peculiarity of these agreements is the entry of capital from outside the border. The restriction of travel between countries for almost 10 months has directly limited the market research. In fact, according to Mr. Su, the agreements made this year are mostly those learned before.
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| Opportunities for investors |
In addition to investing in new projects, mergers and acquisitions are and will be an important part of the investment activities of foreign investors in Vietnam. Although the data at the beginning of the year showed the slowdown, but with the above irreversible trend, the representative of the Department of Foreign Investment said that the understanding of merger and acquisition transactions of foreign investors in domestic companies. Now it looks like a compressed spring and will set the stage for a boom in 2021.
Ms Pham Mai Huong, director of financial advisory and commercial purchasing at KPMG Vietnam, revealed that in the first months of 2020, the clients who came to exchange did not decrease, especially in the field of infrastructure. furniture. However, this context, in addition to the essential consumer goods retail segment, is aimed at the production of raw materials and export products with good export potential.
“The trend of investors interested in the consumer finance industry, the technology platform becomes the minimum condition of the source of goods offered by our clients,” said Tran Thi Bao Ngoc, Director of the VPS Investment Services Department Bank, he said.
As noted, big deals are likely to be closed in 2021. The leading country for deals is Korea, Japan, with some deals worth $ 500 million or more.
All consultants said that, not because of the epidemic, the attractiveness of the M&A market declined. The review and evaluation process does not affect too much because the two parts also understand each other, online meeting, content prepared in advance, the review process is usually delayed only a little in the final plan. agreement.
Ms Nguyen Thi Van Khanh, Senior Director of Capital Markets, JLL Vietnam, said that the big challenge for Vietnam to receive capital flows from M&A is transparency in corporate governance and the legality of the project. This is because foreign investors are very concerned about the reputation of the business and the legality of the project. If local investors can meet those criteria, mergers and acquisitions will be more in 2021 and beyond.
Duy Anh
