Vietnam M&A market forecast to rebound to US$7 billion in 2022

While the Covid-19 pandemic has severely impacted Vietnam’s mergers and acquisitions (M&A) market, it is set to stage a V-shaped recovery to around US$4.5 – 5 bilion in 2021 and jump to US$7 billion in 2022, according to General Director of AVM Dang Xuan Minh.

Editor-in-Chief of Dau Tu Newspaper Le Trong Minh at the press conference. Photo: Truong Huyen.

After a decade of strong growth of M&A market with thousands of transactions and a total value of nearly US$50 billion, the market has now entered a new phase of development with both opportunities and challenges, stated Mr. Minh at a press briefing on the Vietnam M&A 2020 Forum themed “Upsurging in the new normal” on November 5.

In Vietnam, the number of M&A value in 2019 reached US$7.2 billion, representing a decline of 5.3% against the previous year. This year, due to the Covid-19, the figure may further decrease to US$3.5 billion, or down 51.4% year-on-year, he added.

These figures are tracking the global trend as the Covid-19 pandemic and a new normal are affecting the world’s economy. In this context, investors and enterprises are adjusting their investment strategies and looking for restructuring current operations, Mr. Minh stated.

The economic crisis has led to growing number of enterprises looking for sale, but buyers are also more cautious before making the purchase decision, he continued.

Mr. Minh referred to CMAC’s data, which are collected from MergerMarket and HSF, that total M&A value globally in the first six months of 2020 stood at US$901.7 billion in 6,943 deals, 52% lower in value and 32% in number compared to the same period last year.

M&A market to boom in coming time

In the case of Vietnam, the slow pace of privatization and divestment of state capital at state-owned enterprises in 2019 and the first nine months of 2020 has also been a factor behind such a poor performance of the M&A market. The market is expecting large-scale divestment deals in the coming time, he said.

Covid-19 and the lockdown adopted by many countries around the world are slowing down the M&A processes in Vietnam. But in the long term, Mr. Minh expected the market would boom with a surge from both supply and demand sides.

During the last six months of 2019 and in 2020, there are still notable M&A deals, which came as a result of restructuring processes or stake acquisition of private corporations, he added.

Foreign investors, especially those from Singapore, Thailand, South Korea and Japan, are still active in the market, Mr. Minh asserted.

Editor-in-Chief of Dau Tu newspaper and Head of the M&A Forum Organization Board Le Trong Minh said M&A activities in Vietnam over the past 11 years have become an efficient channel of capital mobilization for the Vietnamese economy, serving as a factor to facilitate the economic restructuring process and speed up privatization of state firms.

Moreover, M&As have been one of the driving forces to enhance corporate governance capabilities and competitiveness of Vietnamese enterprises, he added.

While the Covid-19 pandemic is having negative impacts on M&A activities, the Editor-in Chief shared the view of Mr. Minh from AVM that the market would soon recover, particularly as Vietnam has managed to put the pandemic under control.