M&A Forum 2017: second session on international investors' perspective

Rick Mayo Smith - Chairman of Ruby Asset International

A lot of people have asked us whether there will be an M&A push in real estate over the next few years. From my 25 years of experience in Vietnam, the real estate market takes up a small part of M&A.

The real estate market has grown by 20 or 30 per cent over the past two years, so it may flat out soon. I believe that if investors want to conduct M&A, they need to be careful and vigilant, especially in terms of fair pricing.

The new law stipulates that foreigners can own a house for 99 years, instead of the 50 years like before. I believe that this change will prompt significant foreign interest in the Vietnamese property market.

The new law on non-performing loans, especially the clauses on collateral, will hopefully change the situation and push up the real estate market, as well as help the financial sector.

Masataka Sam Yoshida - Senior managing director of Recof Corporation

Recof has been successfully cooperating with a number of Vietnamese investors.

We have been in Vietnam since 2011, when there were only one or two Japanese investors in the real estate market. The situation has been changing a lot, especially since 2015, when a wave of Japanese investors has invaded Vietnam.

We are now participating in different segments of the real estate market, such as luxury apartments and offices, and we see that market has high potential and there is still more room for development in the coming time.

In the near future, we think that we should slow down our investments in Vietnam and be more careful about the fast development of the market. However, we are seeing many good projects with great potential and feasibility and would make good supply for M&A activities in Vietnam.

We hope that the Vietnamese partners will also see this and there will be more and more deals signed in the coming time.

Chu Chee Kwang - General director of Nam Long Group

We expect that real estate M&A will increase in the coming time. We have experience in partnerships with foreign investors, like Keppel Land, Nishi Nippon Railroad, and Hankyu Realty.

The partnerships help us to raise capital and gain the best practices from experienced developers. In the joint venture with Japanese investors, it took us 2.5 years to develop the first project with 500 units.

In the second project, we have increased the units to 5,000 to serve the robust market demand. Real estate M&A requires a long-term partnership, as it takes many years to develop a project. The most crucial factor is to ensure the efficiency of operations as committed to foreign acquirers.

Vincent Lork - Regional director of Asia Pacific, Intralinks

M&A is a complicated process related to many different aspects, from the beginning to the end. It is also related to the business and investment environment. To upgrade this process and increase the proportion of successful M&A deals, we have to prepare before going into a deal. Sellers should prepare their dossiers as much and as thoroughly as possible.

Different partners involved in M&A activities should set up a network of different types of assets and buyers, and study buyers more closely.

More importantly, sellers should create a digital database to permit buyers to easily approach their assets, narrowing the gap between sellers and buyers and bringing much more opportunities for both. For buyers, the success or failure will ride on their ability to appraise assets’ value and partners’ abilities.

John Lim Hui Min - Head of Commercial & Residential, VSIP Vietnam

We have been operating in Vietnam for 20 years now, and we actually started as a joint venture between Becamex Vietnam and Singaporean investors, which can be counted as an M&A deal in itself.

From our experience in dealing with firms in the Vietnamese market, we believe that foreign investors pay close attention to Vietnamese firm’s management and corporate governance. This remains a big issue in Vietnam.

Moreover, both partners need to share the same strategy and have a good relationship with each other. Overall, foreign investors need integrity and transparency in strategy. They also need confidence that the M&A investment can reap returns for them in the long term.

Le Viet Anh Phong - Partner, Head of Financial Advisory Services at Deloitte Vietnam

Deloitte advises around 40-50 deals per year. There are many challenges to conclude a successful M&A transaction.

While big companies like Masan and Vingroup are very active in the M&A space, most small- and medium-sized companies do not have a clear strategy for M&A, whether to raise new capital or to expand to overseas markets. If the companies need money, they can borrow from a bank.

To conclude a successful deal, we suggest that sellers formulate clear business plans to get a better valuation later. The sellers need to ensure transparency in corporate information disclosure.