In the first six months of 2019, total transaction value from merger and acquisition (M&A) deals in Vietnam hit US$1.9 billion, down 47% year-on-year at US$3.55 billion.
Overview of the press conference. Source: VGP.
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In 2018, the M&A value in Vietnam reached US$7.64 billion, down 25.1% year-on-year. If excluding the record US$4.89-billion Sabeco deal made by ThaiBev in 2017, the 2018 value would have increased 41.4% year-on-year.
On July 22, South Korean KEB Hana Bank’s acquisition of a 15% stake worth US$868 million in state-run BIDV, the country’s second largest lender by assets, made headlines and became the largest foreign-invested M&A deal involving foreign investment in Vietnam’s banking sector so far.
Meanwhile, South Korea’s SK Group investment of US$1 billion in Vingroup in May has served as a driving force for the transition of the Vietnam’s M&A market towards a new development phase, focusing on large scale M&A deals in the private sector, said experts at the press conference.
In 2018 – 2019, most M&A deals have been focused on the sectors of finance consumer, retail, real estate, logistics, and education.
The M&A value could reach US$6.7 billion in 2019, down 11.84% year-on-year, according to experts.
Le Trong Minh, editor-in-chief of Vietnam Investment Review, said Thailand dominated Vietnam’s M&A market in 2017, but in 2018, there was strong growth in capital inflow from South Korea, exceeding those of from Singapore, Hong Kong or Thailand.
As the government is pushing for a revision of a series of laws and regulations, including the Investment Law, Law on Enterprises, Securities Law, as well as the upcoming resolution of the Politburo on attracting next-generation FDI and the the enforcement of mega trade deals such as the Comprehensive and Progressive Trans – Pacific Partnership (CPTPP), the EU – Vietnam Free Trade Agreement (EVFTA), among others, huge opportunities have been opened up for Vietnam to attract foreign investment, especially through M&A deals.
Vice Minister of Planning and Investment Vo Thanh Thong said in addition to being selective in attracting high quality FDI projects, the government would focus on new investment methods, such as non-equity modes (NEM) or M&A.
However, experts also pointed out challenges that the M&A market in Vietnam is facing, including changes in trade policy from major economies such as the US, China, or delay in the privatization and divestment process from local state-owned enterprises.
Meanwhile, the lack of attractiveness in enterprises and inefficient in regulations and polices are restricting more investment capital from M&A sources.
The top 10 M&A deals in 2019 to date are SK Group's investment in Vingroup and Masan, Saigon Coop with Auchan; Thaco with Hoang Anh Gia Lai; Vingroup cooperating with SK, Hanwa, Achos, Fivimart; Minh Phu with Mitsui; Taisho with Hau Giang Pharmacy; Vinamilk – GTN Foods; Pan Group – Sojitz; and Gelex – Giglacera.
