Domestic groups emerge as top buyers

Vietnamese companies can extend their reach to the international market, the M&A Forum heard

At the Vietnam M&A Forum 2023 last week, Tran Duy Dong, Deputy Minister of Planning and Investment, said that mergers and acquisitions (M&As) have been a popular strategy for local firms to scale up presence in the domestic and international market.

“The tough period is the right time for many Vietnamese businesses to reconsider their strategies, seek new growth models, and focus on restructuring production and business activities in a long-term, sustainable direction. Many businesses have built comprehensive strategies and plans to find partners for co-development, and M&A is a preferred path,” Dong said.

“A positive sign is that domestic companies are also emerging as buyers, willing to acquire the assets of other domestic and international businesses to complete their ecosystems. There are increasingly ample opportunities for all parties to find common ground and join hands to achieve prosperity with support from the government’s robust economic recovery policies,” he added.

In October alone, VinFast announced its intention to acquire 99.8 per cent of VinES Energy Solutions JSC. KIDO Group increased its stake in Tho Phat Food Processing Co., Ltd. from 25 to 68 per cent. Meanwhile, TLK Agriculture JSC agreed to acquire Phu Ben Tea Co., Ltd. from McLeod Russel India for $2.15 million.

Another noteworthy transaction from earlier this year includes FPT’s consecutive cross-border acquisitions of the IT services business units of Intertec International and Cardinal Peak to strengthen its product engineering delivery capabilities.

Meanwhile, VinFast’s strategic efforts to optimise its vehicle manufacturing value chain since 2020 has involved acquisitions in Australia, Israel, and Taiwan amounting to a disclosed value of up to $210 million; and Sherpa, a subsidiary of Masan Group, has invested $105 million in Trust IQ, a Singapore-based technology and application development company, to gear towards harnessing AI within their retail ecosystem.

“Vietnamese businesses’ recent rapid acquisition of foreign firms is not only to extend their reach to the international market but also utilising outbound M&A transactions to acquire key additional capabilities, including technology know-how, intellectual properties, quality control and enhancement, management skills, and other intangible assets,” said Binh Le Vandekerckove, CEO and head of M&A Advisory of ASART. “These major strategic goals are to bolster technological capabilities, facilitate the development of innovative products, enhance supply chain operations, and improve operational efficiency.”

According to a report on Vietnam’s M&A market gearing for strategic growth published by KPMG, the market experienced a frenzy in value and volume led by domestic investors starting in 2020 as many strengthened their market share and vertical integration. However, such unprecedented capital mobilisation among domestic investors ended at the end of 2022, with their total share claiming the first spot and peaking at over $1.3 billion in deal value.

In the first 10 months of 2023, as domestic investors turned defensive and reassessed their strategies, their share in M&A value now felt to $161.6 million, or around 4 per cent of the total reported deal value.

The report pointed out that Vietnam’s M&A market has evolved significantly, with domestic firms becoming more assertive and sophisticated. In addition, foreign investors increasingly view Vietnam as a key strategic market in Southeast Asia.

M&A arena expects growth next year Due to an unstable global economy, the merger and acquisition market will face many challenges in 2024, but there will still be great opportunities in several sectors, according to experts.

How 2024 is shaping up for M&As With positive signals in real estate and technology-related merger and acquisition (M&A) deals in the latter part of 2023 and policy changes aimed at attracting foreign investments, the Vietnamese M&A market is expected to recover and thrive in 2024. Explaining more is ASL Law’s managing partner Pham Duy Khuong and senior partner Nguyen Thi Thuy Chung.

Industrial real estate gaining M&A interest Although not dominating in terms of the number and value of deals, the industrial real estate market is starting to record more interest in mergers and acquisitions from foreign investors.