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Investment
Jan 05, 2018 / 09:44

M&A value in Vietnam on track to reach US$20 billion

Ngoc Thuy

With the booming of the mergers & acquisitions (M&A) market in recent months, expectation for the Vietnam’s M&A value to reach US$20 billion is within sight.

As such, one of the most sought-after deal in 2017 is the divestment of state fund at Saigon Beer Alcohol Beverage Corp (Sabeco), Vietnam’s largest brewer. Vietnam Beverage, a domestic unit of Thai Beverage has successfully bought 53.59% Sabeco shares with value of US$4.8 billion. The deal has taken M&A Vietnam to a new height, exceeding the record set 5 years ago at approx. US$5 billion. 
 
The Sabeco's deal raised nearly 5 billion USD alone for state fund.
The Sabeco's deal raised nearly 5 billion USD alone for state fund.
This successful deal has eased off concern from investors and some administrative agencies, showing the positive responses from the market toward determination and effort of the government in respecting market principles and meeting expectation for a transparent business environment. 

On the other hand, the State Capital Investment Corporation (SCIC) received 9 trillion VND (roughly US$280 million) for selling 3.33% stakes in Vietnam Dairy Products (Vinamilk) on the Ho Chi Minh stock exchange on November 10 for Platium Victory Pte Ltd. 

The M&A Vietnam in 2017 with major deals has solved challenges restricting the growth of M&A in Vietnam, specifically, foreign investors still consider Vietnam as an attractive destination; removing bottleneck in the process of equitization and divestment from state owned enterprises (SOEs); leading SOEs are encouraged to divest state fund, while private sector is more open to foreign investors. 
 
Plan to divest state fund from Vinamilk also attracted interests from foreign investors.
Plan to divest state fund from Vinamilk also attracted interests from foreign investors.
Evidently, a series of transactions are concluded with the participation of foreign investors. For example, Synnex Technology International (Taiwan) bought 30% stakes of FPT Retail and 47% stakes of FPT Trading from FPT, for which FTP received VND932 billion in return from the FPT Trading’s deal. Ho Chi Minh Development JSC (HD Bank) is planning to list its share on Ho Chi Minh City Stock Exchange in 2018, after deciding to sell 20% of its shares to foreign investors. Major financial institution in Vietnam’s stock market such as Credit Saison (Japan), Deutsche Bank AG (Germany), JPMorgan Vietnam Opportunities Fund, CAM Bank (Japan), Dragon Capital VinaCapital, Macquarie Bank (Australia), PYN Elite spent US$300 million, equivalent to over US$6.8 trillion for HDBank’s shares. 

In real estate sector, statistics from the Commercial Real Estate Services (CBRE), capital contribution from private sector in 2016 and 2017 totaled US$613.5 million. Major deal included Vincom Retail raised US$740 million in Vietnam’s largest ever equity deal; Shinhan cooperated with VinaCapital for US$100 million invested in Novaland; Samsung Securities in collaboration with Caldera Pacific, a private equity from Hong Kong purchased 40% shares of Dragon Capital; Keppel Land bouth 20% shares of Quoc Loc Phat, the owner of Song Viet complex with value of US$7.3 trillion (roughly US$322 million) in Thu Thiem, Ho Chi Minh city. As such, the year of 2018 is expected to be the right time for foreign investment flowing into the real estate sector.

For all the potential of the M&A in Vietnam, it is safe to say that the target value of US$20 billion in M&A 2018 is within reach.  

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