60 percent of capital was injected into M&A deals in HCMC

FIA (Foreign Investment Agency) reported that by December 20, 2017, foreign investors had made 50,000 deals of contributing capital and buying into Vietnamese enterprises, worth $6.19 billion, an increase of 45.1 percent over 2016. 

Meanwhile, a report released by the HCMC People’s Committee at the conference on implementing measures for socio-economic development showed that the city allowed 2,276 foreign investors to contribute capital, buy a stake and receive capital transfer of Vietnamese enterprises in 2017, worth $3.68 billion.

This means that HCMC made up 59.5 percent of foreigners’ total capital contribution in 2017. While the foreign investments through M&A deals only accounted for 17.25 percent of the total foreign investment committed in 2017, the proportion was 57.7 percent in HCMC.

Many big M&A deals have been made since 2014 with the value increasing year after year and reaching a peak in 2016 with the total value of $5.82 billion. 

From the end of 2016 to mid-2017, the number of M&A deals and the value of the deals decreased, but it bounced back after the second half of 2017.

Observers believe that the real value of the M&A deals in 2017 will be higher than the reported figure because statistics continue to be updated.

One of the most noteworthy deals in 2017 in HCMC was the one in which Vietnam Beverage which has relation with a Thai billionaire, successfully acquired 343.642,857 shares of Sabeco, the Vietnamese largest brewer, in a deal worth $4.8 billion in late December.

If counting the Sabeco deal, the total foreign investment capital through M&A would be $11 billion in Vietnam and $8.48 billion in HCMC.

Commenting that there are many barriers that need to be removed to support M&A deals, lawyer Seek Yee Chung from Baker & McKenzie said the potential in Vietnam is great thanks to reform in the country.

He said he can see breakthroughs in the legal framework, and once foreign investors find legal policies predictable, they will make investments.

Regarding the ‘breakthroughs in the legal framework’, he mentioned the daring steps by Vietnam to open the market to foreign investors, and the policies related to equitization and divestments of state-owned enterprises.

An analyst commented that since July 1, 2015, when the 2014 Investment Law took effect, the activities of contributing capital and buying into Vietnamese enterprises have increased. 

The law says that foreign investors do not have to register their capital contribution and stake purchase deals as they have to do with foreign direct investment projects.

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