return icon Vietnamnet.vn

M&A set for a bustling second half

M&A deal-making will probably increase at a steady pace in the second half of 2020, led by the upcoming mega deal of Vietnam’s leading brewer Sabeco.

ma set for a bustling second half

 

According to a government document released last week, the Vietnamese government will sell its remaining 36 per cent stake in Sabeco by the end of this year. The state can collect VND37.6 trillion (around $1.63 billion) from the divestment. The Ministry of Industry and Trade will complete the stake transfer to State Capital Investment Corporation by late August to facilitate the deal. With an investment sum of nearly $5 billion, Thai Beverage’s takeover of Sabeco in 2017 was Vietnam’s biggest mergers and acquisitions (M&A) to date. If the mega deal of 2017 can be replicated in 2020, it will keep the deals flowing in Vietnam, especially as the overall M&A market in the region has slowed down due to the coronavirus pandemic.

According to Baker McKenzie, despite a slowdown in global deal-making due to worldwide economic uncertainty, Vietnam remains active in M&A. The US law firm predicted cross-border acquisitions to dominate M&A deals in the coming years, as the country’s solid fundamentals continue to attract foreign investors.

Vu Thi Que, chairwoman of law firm Rajah & Tann LCT, is upbeat about the prospects of deals in the second half of this year. She said that the number of M&A transactions will increase, spread across many areas as well as in size, ranging from small to medium and big deals. The main reason of this is that many enterprises will be torpedoed by the coronavirus and be left with no option but to sell or merge with others. In addition, M&A is the fastest option to expand business scale and market share for businesses with strong capital operating in areas not or only a little affected by the epidemic.

Indeed, M&A activity in Vietnam was down 56.8 per cent on-year in the first half of 2020 with 4,125 instances of capital contribution and stake purchase worth $3.5 billion. According to fresh data from the Ministry of Planning and Investment’s Foreign Investment Agency. There have been a number of high-profile deals recently, buoyed by investor interest in Vietnam’s M&A market. Japan’s Mitsubishi UFJ Lease & Finance Co., Ltd. is acquiring a 49 per cent equity interest in VietinBank Leasing, a wholly-owned subsidiary of VietinBank. The transaction was signed on June 22 and is pending government approval.

Meanwhile, Manulife Financial Corporation is emerging as the leading bidder for Aviva Plc.’s Vietnamese unit as it looks to expand in Southeast Asia. The Canadian insurer is weighing a deal that would include a so-called bancassurance agreement with Aviva’s local partner VietinBank to sell insurance products through the state-owned lender’s branches, as reported by Bloomberg.

In June, a consortium led by global investment firm KKR that includes Singapore’s Temasek has completed an investment in Vinhomes, the leading integrated real estate developer in Vietnam. The consortium has collectively invested VND15.1 trillion ($656.5 million) which translates into a 6 per cent equity stake in Vinhomes. The investment underscores the attractiveness of Vietnam as a regional investment destination with its strong development and growth prospects.

In May, SK Investment III, a subsidiary of South Korea’s third-largest conglomerate SK Group, got more than 12 million shares (nearly 25 per cent) of Imexpharm Corporation at an undisclosed value in further testimony to the group’s longterm designs in Vietnam.

Commenting on the latest deals, Masataka Sam Yoshida, head of the Cross-border Division and CEO of Vietnam RECOF Corporation, said, “If we look at the VietinBank deals, without knowing the detailed background, the deals with Mitsubishi and Aviva look like ‘given’ transactions which had to happen due to their existing relations. The Mitsubishi UFJ Lease & Finance deal was a direct result of the firm relationship between their parent banks and the deal with Aviva may also come from the long-standing historical relations between Aviva and VietinBank.”

Only SK Group’s deal looks like a new development, however, this may be more of a financially-oriented transaction supported by the bright prospects of Vietnam’s pharmaceutical sector. Thus, the driving factors activating the market in the coming time are the Vietnamese government’s policies to open the gates wider for visiting investors as early as possible as well as optimising decision-making on the side of local authorities not to interfere unduly and to approve foreign investors with intentions of finding local partners and willing to pay a fair price.

Sam Yoshida believed in the dynamism of the Vietnamese economy to attract big investments led by mega companies. However, he said he would monitor this trend further to see if it will be a prevalent trend or will be slowed down by the numerous factors clearly affecting the business activities of global corporations.

For instance, the Japanese M&A market saw a 16 per cent drop on-year in deals during the first half of 2020, accompanied by a 59 per cent decrease in transaction value. There are similar trends in the United States, however, it is not easy to make a clear comparison as there are very different circumstances. The RECOF expert hoped Vietnam would maintain the current trend and stay a healthy M&A market post-pandemic.

Meanwhile, Que of Rajah & Tann LCT said that recent big deals are mostly due to two reasons. Firstly, the epidemic has plunged many economies into deep recession and disruption. In many of the affected countries, despite social distancing, the epidemic cannot be controlled and has taken a heavy toll on many big corporations who, in turn, are looking to disperse risks and make considerable investments in potential markets which are not seriously affected by the epidemic, like Vietnam. Accordingly, the sectors seeing large M&A deals are the ones with elevated potential like insurance, healthcare, and banking.

Secondly, Vietnam has had relatively stable GDP growth during the past three years (about 7 per cent in 2017-2019). In contrast with the global economy, the Vietnamese government’s success in fighting the virus means it has first-mover advantage in reopening the economy, and projects could be implemented with much greater ease. VIR

Thanh Van

Petrolimex pushes for PGBank-HDBank merger before Aug 31

Petrolimex pushes for PGBank-HDBank merger before Aug 31

Petrolimex, which holds a 40% stake in the Petrolimex Group Commercial Bank (PGBank), sought to complete the merger between PGBank and the HCMC Development Bank before August 31, said the Vnexpress website.

Vietnam's e-commerce platforms Tiki, Sendo apply for merger

Vietnam's e-commerce platforms Tiki, Sendo apply for merger

The merger will make the race in the e-commerce market more exciting.

MORE NEWS

Vietnam contributes to International Law Commission

Vietnamese Ambassador Nguyen Hong Thao has pledged to make more contributions to the progress and development of international law, for peace, friendship, cooperation and sustainable development worldwide.

Pencak silat fighter enjoys golden year

Pencak silat fighter Quang Thi Thu Nghia has had amazing year of competition when she has won titles from all competitions that she took part in.

Pop singer to compete at MTV Europe Music Awards

Pop singer Pham Dinh Thai Ngan from HCM City will represent Vietnam at the MTV Europe Music Awards (MTV EMA) 2022.

PM hosts national committee on digital transformation’s third session

Prime Minister Pham Minh Chinh chaired the third meeting of the National Committee on Digital Transformation on August 8 to assess digital transformation pace during the first half of 2022 and devise tasks for the time ahead.

Liem to face off against chess king Carlsen at FTX Crypto Cup

Vietnam’s leading chess player Le Quang Liem has revealed that he will take on Norwegian chess king Magnus Carlsen at the FTX Crypto Cup which is scheduled to take place in Miami, USA, from August 15 to August 21.

Vietnam ranks third overall at ASEAN Para Games 2022

Vietnamese athletes bagged seven more gold medals on August 5, the last competition day of the ASEAN Para Games 2022, retaining their third place in the medal tally.

Corporate bond market struggling with challenges

The size of the corporate bond market is estimated at some VND1,374 trillion, equivalent to 15% of GDP. The Government aims to raise this figure to 20% by 2025.

President requires greater efforts to promote value of Ngoc Linh ginseng

Ngoc Linh ginseng deserves the "National treasure" title, and it is necessary to strongly promote the role of this treasure in improving people's livelihoods, President Nguyen Xuan Phuc said .

EVFTA outpaces CPTPP in preference utilisation rate

The utilisation rate of tax incentives set out in the EU-Vietnam Free Trade Agreement (EVFTA) during Q1 soared by over 32%, representing a four-fold rise compared to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Refusal to issue visas to new VN passport causes problems for travel firms

The rejection of Vietnam’s new passport by some EU member countries is affecting HCM City tourism companies since their customers are unable to travel to those countries.

Vietnam set to scrap COVID quarantine for imported processed seafood

The Ministry of Agriculture and Rural Development has removed COVID-related quarantine requirements for frozen processed seafood products imported for the purpose of reprocessing for export.

HCM City seeks to boost technology transfer from universities

Huynh Kim Tuoc, managing director of Sai Gon Innovation Hub's (SiHub) Start-up Support Centre under the HCM City Department of Science and Technology, affirmed Vietnam holds tremendous potential for technology development

Vigilance urged against COVID-19 amid emergence of new epidemics

Prime Minister Pham Minh Chinh asked ministries, agencies and localities to maintain vigilance against COVID-19 while addressing a meeting in Hanoi on Saturday.

Vietnamese, British agencies coordinate in identifying fire victims

The Consular Department under the Ministry of Foreign Affairs and the Vietnamese Embassy in the UK will continue to coordinate with Vietnamese and British agencies to identify victims in a blaze in Greater Manchester on May 7.

Photo contest highlighting beauty of Vietnamese islands kicks off

Professional and amateur photographers across Vietnam are encouraged to compete in a photo contest highlighting the beauty of Vietnamese Hoang Sa and Truong Sa islands.
back_to_top