Experts have warned that more big Vietnamese players will fall into foreign hands.

The news that a foreign giant is negotiating a deal in which it will spend $1.5 billion to buy the properties of a Vietnamese real estate firm has caught public attention.

The news became even more concerning after Minister of Planning and Investment Nguyen Chi Dung said at an event that many Vietnamese enterprises have had to sell most of their assets and the buyers were mostly foreigners.

The fact that foreign groups, including Thai, Japanese and South Korean, have taken over or are considering taking over Vietnamese enterprises is not unfamiliar. M&A (merger and acquisition) activity was first seen more than 10 years ago.

However, the recent M&A wave has worried the Vietnamese. Thai investors alone own a number of Vietnamese manufacturing enterprises. They now hold shares of very profitable Vietnamese companies after a decade of buying into Vietnamese enterprises and collecting dividends from them.

In 2017, the public was stirred up by the deal of ThaiBev, owned by Thai billionaire Charoen Sirivadhanabhakdi. He spent $5 billion to acquire 54 percent of shares of Sabeco, the best beer brand in Vietnam.

Sabeco remains a leading brewer in the domestic market and steadily produces money for the Thai owner. The company plans to pay additional special dividends of 15 percent for 2022, thus raising total dividends to 50 percent. The big shareholder, Thailand Vietnam Beverage, will receive VND1.7 trillion.

A decade ago, Thailand’s SCG Group began taking over Binh Minh Plastics (BMP), one of the biggest manufacturers and distributors of plastic tubes. After the State’s divestment in March 2018, Nawaplastic acquired 49.9 percent of BMP shares and later raised its ownership ratio to 55 percent.

In 2022, BMP used most of its profit to pay dividends and the Thai shareholder collected VND370 billion. It is estimated that SCG has earned nearly VND1 trillion worth of dividends from the Vietnamese enterprise in the last decade.

Fraser & Neave, another Thai investor, holds over 20 percent of capital in Vinamilk, the nation’s leading dairy producer. In 2022, Fraser & Neave earned VND1.6 trillion from the dairy producer. With the average dividend of 50 percent per annum, the Thai investor has collected about VND12 trillion worth of dividends.

Concerns 

Every year, Thai investors have been acquiring more and more Vietnamese enterprises – ones with great potential, operating in fields with stable cash flow or in the retail industry.

After Binh Minh Plastics (BMP) and Bien Hoa Packaging (SVI), Ngoc Nghia Plastics, a big player in the packaging industry, has also fallen into Thai hands. Thai TCG Solutions holds 94 percent of SVI, while Indorama Venture, also from Thailand, holds 98 percent of Ngoc Nghia.

At the 2023 annual shareholders’ meeting, SHB said that the deal of selling the finance company to a Thai investor had been completed and SHB was following the last administrative procedure. The partner is likely to pay 50 percent of the value of the deal in May.

Prior to that, investors witnessed Central Group, belonging to the Chirathivat family, acquire 49 percent of the company that owned Nguyen Kim, a well-known home appliance distribution chain, in 2015. 

Later, its ownership ratio was raised to 100 percent. The Thai group also acquired Lan Chi supermarket chain, which is mostly present in rural areas.

Central Group successfully took over Big C Vietnam which once belonged to the French Casino Group after a deal worth $1 billion.

TCC Group, another Thai investor in the retail industry, in 2016 spent 655 million euros to take over Metro Cash & Carry Vietnam which changed its name to MM Mega Market.

Not only large corporations, but many Thai large investment funds have pumped money into Vietnamese shares. Kasikorn Asset Management, Principal Vietnam Equity Fund, Bualuang Vietnam Equity Fund, Asset Plus Vietnam Growth RMF Fund and Asset Plus Vietnam Growth Fund have purchased blue chips such as VCB, ACB, MWG, FPT, HPG and VRE.

With the development of products supporting the stock market such as DR (depository receipt), Thai individual investors can indirectly invest in Vietnam’s shares.

In general, foreign capital is warmly welcomed by Vietnam. The investment capital helps implement projects, build factories and enterprises, create jobs and expand local economies. This explains why foreign investors receive a lot of investment incentives.

However, some deals of selling capital to foreign investors at some leading manufacturing enterprises have raised worries among economies, who warn that Vietnam’s production, which is still weak, may become more volatile. 

With powerful financial capability, foreign groups may swallow many Vietnamese enterprises and control the entire key industries of Vietnam. Meanwhile, domestic enterprises remain very small and many of them have to struggle hard to survive after the Covid-19 pandemic.

Manh Ha