31st Sea Games - Vietnam 2021 Covid-19 Pandemic
Dec 12, 2021 / 20:34

Investors optimistic about Vietnam's M&A market

Attractive opportunities for merger and acquisition in the Vietnamese market have led to a busy end of the year for investors who are closing record deals.

The year 2022 will see a strong rebound for Vietnam and this is also an opportunity for investors with healthy resources to jump into merger & acquisition (M&A) activities.

The forecast was made by local insiders as 2021 is a record year in terms of customer support related to M&A deals for the consultant company in Vietnam and globally.

 Delegates attend the event. Photo: Phi Nhat

According to Chairman and CEO of KPMG Vietnam & Cambodia Warrick Cleine, there are a lot of domestic and international investors who are looking to pour money into Vietnamese businesses.

Despite the unpredictable pandemic situation, the size of Vietnam's M&A market value reached US$8.8 billion in the first ten months of 2021, an increase of 18% compared to 2020, with a total of more than 500 deals, according to KPMG.

The proportion of M&A value in which Vietnamese enterprises play the role of buyers tends to increase. They spent $1.6 billion on M&A of which $1.13 billion was invested in 11 deals by five Vietnamese companies such as Vingroup, Masan, NovaLand, Hoa Phat, and Vinamilk.

Among the total value, about 58% of M&A transactions came from consumer goods, real estate, and finance, according to local insiders. Fintech, financial services, and logistics are making many investors optimistic.

Being of the same mind, Vo Ha Duyen, Chairwoman of VILAF Law Firm, stated that investment funds have been looking at the Asian market as a long-term strategy.

“Although the deals may take longer to complete due to some obstacles such as travel and appraisal, they were successful thanks to the opportunity and potential in the extremely attractive Vietnamese market,” Duyen said.

Cleine and Duyen, who participated in the Vietnam M&A Forum 2021, which was held in Hanoi on December 9, recognized that although the Covid-19 pandemic has greatly affected the whole world economy, the fact that M&A transactions in Vietnam are still increasing proved the confidence in the Vietnamese market among domestic and foreign businesses. It also is based on how well Vietnam has controlled the pandemic.

Masataka Sam Yoshida, Head of Cross-border Division at RECOF Corporation and CEO of RECOF Vietnam said, despite the impact of Covid-19, Vietnam ranked in the top two most important destinations for Japanese investors, after Singapore.

In 2021, the transaction value increased sharply with a large deal between SMBC Consumer Finance and VP Bank, he added.

Due to the long preparation time, many deals would not be completed until next year. Le Khanh Lam, Chairman of RSM Vietnam, said in the case of small-scale deals, some investors want to complete them as quickly as possible, but concerning big ones, they are more careful because they cannot directly visit the investee and its board of directors.

 Production lines of Vinamilk's factory. Photo: Vinamilk

The rise in M&A transactions also shows that the business investment environment in Vietnam is really attractive, according to local and foreign participants at the event.

Lam from RSM Vietnam said foreign direct investment in Vietnam is growing and investors have high confidence in the Vietnamese market in the coming years. However, before making a decision on a big deal, investors also need to seek a lot of other information.

According to Lam, attractive new industries will be renewable energy, pharmaceuticals, telecommunications, and infrastructure. “In particular, investors are rushing to spend in renewable energy,” he said. “The orientation of the Government for renewable energy in recent years has created many opportunities for domestic and foreign investors.”

From a management agency’s view, Tran Quoc Phuong, Deputy Minister of Investment and Planning said after two years of facing many difficulties due to the impact of the pandemic, the business community has made great efforts to find new growth models or restructure to adapt to the rapidly changing context based on economic support and recovery policies issued by the Government.

He added that the legal corridor for investment and business activities is also constantly being improved with the revised Law on Investment and the Law on Enterprises.

The Law on Investment in the form of public-private partnership (PPP) officially took effect in early 2021 and the Government will submit a new law that can amend many current laws to the National Assembly for consideration in order to remove difficulties, create favorable and open conditions for investment and business activities in Vietnam, including M&A activities.

“I believe that, although there are still many difficulties and challenges in the immediate future, M&A activities are expected to increase sharply and explode in 2022 and the following years,” he underlined. “Many businesses are ready to accept new opportunities, leading to a sharp increase in M&A demand in the near future.”