VietNamNet Bridge – More private equity (PE) investors are optimistic about Vietnam’s outlook over the next 12 months given improvements in economic growth and stable macro-economic factors in this market, according to Grant Thornton Vietnam.

The 11th bi-annual PE report by the firm for the second quarter of 2014, also known as the Q2-2014 report, showed nearly 48% of PE investors have a positive outlook for Vietnam’s economy over the next 12 months compared to 43% in the fourth quarter of last year (the Q4-2013).

“This continues the trend of increasing in investor confidence in Vietnam’s economy over the previous few quarters,” the company said and added the report’s findings are based on the opinions of economic and business decision makers and individuals in Vietnam and the region, who have “a significant focus on Vietnam’s economy.”

Ken Atkinson, executive chairman of Grant Thornton Vietnam, said in the report that there have been sustained improvements in macro-economic stability and some positive signals that Vietnam’s economy has begun to recover though its economy is still facing many challenges.

Given the positive factors, Atkinson said foreign capital is expected to continue to flow into Vietnam through merger and acquisition (M&A) activity in the coming years.

Grant Thornton Vietnam said Vietnam’s standing as an attractive place to invest compared to other regional countries has also increased among PE investors. The Q2-2014 report indicated 51% of respondents selected “More attractive” when asked about Vietnam’s investment attractiveness, a notable rise over the 36% of respondents ticking this category in the Q4-2013 report.

The latest report also unveiled that the retail industry has surpassed the food and beverage industry to become the most attractive sector for investment in Vietnam with 52% of respondents choosing this sector. This result is in stark contrast to the Q4-2013 report where just 22% of respondents picked retail as the most attractive sector to invest in.

Vinh Ha Nguyen, advisory services partner of Grant Thornton Vietnam, said despite lower growth in domestic retail sales in the last few years due to the economic slowdown, the retail industry is still expected to experience double digit growth as a result of rapid urbanization and a large youth population.

“Growth will further be enhanced as consumer living standards continue to rise and the economic recovery, which began in 2013, gains momentum,” she said.

Figures by the General Statistics Office showed total retail sales of goods and services last month stood at VND238.7 trillion, up a mere 0.3% over the previous month. But, accumulated sales in the first seven months of the year rose 11.4% year-on-year to around VND1,655 trillion.

According to the Q2-2014 report, 36% of respondents opted for food and beverage industry, a slight rise from 34% in the previous report.

“Consumer demand in this sector continues to remain strong due to the rapid development of local supermarkets and the increasing influence of Westernization among the country’s 90 million citizens,” the company explained.

Regarding major obstacles for PE investors, 61% of respondents named differences in valuation expectation continue to be a key issue and ranked this to be “the number one killer of business deals.” But, the percentage has fallen from the Q4-2013 survey where it received a score of 89% as sellers become more realistic in their expectations.

The new report also contains information of interest to private equity investors including investment allocation, important drivers of value growth, level of hands-on involvement expectation, level of exit multiples and key factors for investment in Vietnam.

Grant Thornton Vietnam was established in 1993 with offices in HCMC and Hanoi. From last month, the member firm of Grant Thornton International Ltd. and NEXIA ACPA Co. Ltd. have agreed to combine. The combined firm will operate under the Grant Thornton (Vietnam) name and provide services in assurance, consulting and development services, corporate finance and tax services.    

SGT/VNN