In the wake of investment shifts and diversification of global supply chains, international investors are increasingly interested in mergers and acquisitions in the ASEAN logistics market.
|ASEAN logistics attracting international attention-illustration photo/ shutterstock |
According to a source from the Vietnam Logistics Business Association (VLA), a number of financiers from Asia, mostly from Japan, South Korea, and China, are studying stake-buying prospects in logistics firms here, where annual market growth amounts to 14-16 per cent.
“Mergers and acquisitions (M&A) are the favoured approach among Asian investors. The trend continues, but now the taste is a little different. I have worked with many companies on some potential deals, focusing on leading players such as Gemadept Corporation, Transimex, and South Logistics JSC,” a VLA representative told VIR.
With global supply and value chains broken due to the COVID-19 pandemic, international companies have been restructuring supply chains towards diversifying. Many countries including the US also incentivise companies that shift from China.
Support and manufacturing businesses such as business-to-business logistics, industrial services, and import and export companies are likely to see a high demand in manufacturing hubs to serve the movement of goods from factories in the ASEAN to customers worldwide.
Vietnam’s shipping services play an important role in developing trade between the country and the ASEAN as more than 90 per cent of its exports and imports are transported by sea. Currently, many air services connecting with the region offer favourable movements of passengers and air cargo. The inland waterways, particularly in the Mekong Delta, are encouraged for development to serve import and export in the area, noticeably in maritime and agricultural products. Investments in cold chain storage are also most welcome.
According to the UN Conference on Trade and Development, global logistics companies have been expanding in the ASEAN because of the increase in commerce and trade activities. As such, investment opportunities for the sector have been increasing accordingly, with recent examples being German outfit DHL and Japanese groups Nittsu Logistics and Yusen Logistics.
The majority of recent M&A deals in the Vietnamese logistics sector involved businesses from Japan and South Korea. Last year, for example, Japan’s Sumitomo and Suzuyo acquired 10 per cent stake in Gemadept.
International ventures also show a strong interest in other ASEAN logistics markets. Some outstanding deals are Japan’s Kintetsu World Express’ acquisition of Singapore’s APL Logistics for $1.2 billion; Franklin Templeton PE’s stake acquisition in Indo Trans Logistics Corporation, one of the top 3 logistics companies in Vietnam; and Singapore’s CWT Group deal.