VietNamNet Bridge - Four giant conglomerates from Thailand, South Korea and the Philippines have been expanding their investments in Vietnam, raising both joys and concerns.

Of the international holding companies which have been present in Vietnam so far, the best known are South Korean CJ Group (food, biology, entertainment, home shopping and logistics), Thai SCG (cement, building materials and plastics), Thai Central Group (retail, restaurant, hotel and real estate) and Filipino Ayala Group (water supply, telecommunication, banking and real estate). All of them are from Asia.

While Vietnamese holding companies remain young as they have been operational just over the last decade, the Asian companies all have long development history, clear business model and large capitalization value.

An analyst noted the capitalization value of many Vietnamese holding companies in total is just equal to the value of one Asian holding company like Ayala.

While Vietnamese companies are now busy making investments in many different business fields in an effort to become larger and make profits quickly, Asian capitalists target long-term plans when exploiting the Vietnamese market.

While Vietnamese companies are now busy making investments in many different business fields in an effort to become larger and make profits quickly, Asian capitalists target long-term plans when exploiting the Vietnamese market.

Vietnam, together with Myanmar and Indonesia, is considered an attractive investment address in South East Asia. It is the ranking which has prompted Asian conglomerates to increase their investments in Vietnam in the last five years.

Vietnam is especially attractive because of the ongoing process of equitizing state-owned enterprises (SOEs). At least 222 SOEs got equitized in 2015 and 174 more are going to be equities for in the next five years. 

Vietnam also has a large number of private businesses which have been looking for ways to develop and they are willing to sell stakes to foreign investors.

Meanwhile, foreign holding companies find the prices of Vietnamese businesses very ‘reasonable’ compared with their financial capability and with the businesses’ capability.

If a foreign investment fund pours capital into a Vietnamese company and then divests shares to a foreign holding company, the divestment value would be just 5-10 times of EBITDA (Earnings before interest, taxes, depreciation and amortization). 

This means that foreign holding companies can buy a Vietnamese stake from investment funds at budget prices.

The four Asian holding companies are all seeking to buy shares to hold controlling stakes in many Vietnamese enterprises. If the deals are successful, these would lead to big changes in the structure of many industries in Vietnam.

CJ, for example, announced that it would pour big money into Vietnam in 2016 with total capital equal to the value of the previous five years (2011-2015) in total, estimated at $400 million.

CJ some days ago ran a race to acquire stakes of Vissan, a food processing company, but it lost the opportunity to Masan, a Vietnamese group.


NCDT