Hanoi (VNA) – Vietnam’s merger and acquisition
(MA) market is seeking a big push as signs of a deceleration have crept up
this year.
MA
deals in Vietnam hit an all-time record of 5.8 billion USD in 2016, a growth of
11.92 per cent compared to 2015’s value, according to a report released at a
press meeting to launch the MA Forum 2017 on July 20.
However,
the market has seen a slowdown since the latter half of last year with fewer
stellar deals. The total value of MA deals reached just 1.1 billion USD in
the first quarter of this year, down 24.4 per cent year-on-year.
According
to the latest research by the MA Forum 2017, the domestic MA market
will likely not surpass 2016’s peak without a breakthrough.
“This
will require a big push from the Government and businesses to boost MA
activities to grow stronger in both quantity and quality,” said Le Trong Minh,
editor-in-chief of Vietnam Investment Review, organisers of the MA Forum
2017, scheduled to be held in HCM City on August 10.
MA
activities in 2017 will face challenges of rising competition in drawing
foreign capital between Vietnam and regional countries and a slowdown in
State-owned Enterprises (SOEs)’ equitisation process, as well as the low
quality of Vietnamese companies and small scale of the economy.
The
Government’s latest report showed that the progress of SOE equitisation has not
kept up with the Government’s and investors’ expectations.
Only
52 SOEs were equitised in 2016, equivalent to 25 percent of the number recorded
in 2015. In the first half of this year, the number was just 20, down 24 percent
from the same period last year.
Vietnam’s
MA market value is small in comparison with other ASEAN countries such as
Singapore with total MA value in 2016 hitting 62.3 billion USD; Indonesia,
Thailand and Malaysia around 11-16 billion USD.
In
terms of deal values, most MA deals in Vietnam were small with over 64 percent
valued below 20 million USD.
Foreign
capital continued to play a dominant role in executing stellar deals with sizes
of between 20-100 million USD. For example, Thailand’s Central Group spent 1.05
billion USD to acquire Big C Vietnam from the Casino Group, and TCC Holdings
purchased the entire chain of Metro Vietnam Cash Carry for 800 million
USD.
Overseas
investors accounted for roughly 77 percent of the total value of MA deals
in Vietnam in 2016. Asian companies continued to lead the market in terms of
the number and value of the deals with Thailand, Singapore, the Republic of Korea,
Japan, China and Hong Kong being the top five buyers in Vietnam.
Retail,
consumer goods and real estate sectors were the most attractive ones for
MA activities, especially deals in the retail sector accounting for 38.5
percent of the total value in 2016.
The
working group of the MA Forum 2017 provides two scenarios for MA
activities in 2017, of which the conservative ratio predicts the total value of
MA deals to reach around 5 billion USD this year, down 14 percent from
2016.
In
the optimistic scenario with a breakthrough from SOEs equitisation, total value
could reach 6.2-6.5 billion USD or higher, equivalent to a growth of 6.5-10 percent.
State
divestments from big companies such as Sai Gon Beer-Alcohol-Beverage Corp
(Sabeco), Hanoi Beer Alcohol and Beverage JSC (Habeco), Petrolimex, Vinamilk
and MobiFone are on the investment radar for both foreign and domestic
investors.
In
2017-18, MA deals will continue to focus on retail, consumer goods and
real estate. In addition, telecommunications, energy and infrastructure are
expected to emerge and see some big deals.
Vietnam
MA forum 2017, an annual event of mergers and acquisitions for companies
and investors from Vietnam and other countries, will take place at GEM Conference
Centre in HCM City on August 10.
The
event has been co-organised by Vietnam Investment Review (VIR) and AVM Vietnam
since 2009 under the sponsorship of the Ministry of Planning and Investment.
Under the theme “Seeking a big push”, the forum will be the platform to
exchange suggestions, introduce opportunities and share experiences to create a
breakthrough in the market this year.
About
30 international and Vietnamese guest speakers and 500 senior leaders from
investment funds, Vietnamese and international corporations are expected to
participate in the event.-VNA