Foreign investors step up M&A activities in Vietnam

In 2024, merger and acquisition (M&A) transactions in real estate, especially the industrial sector, look likely to continue to lead in value. Can you elaborate on this?

Vietnam’s industrial real estate sector is growing quickly for several reasons. Firstly, the country’s role in global supply chains is becoming more important as companies spread out their manufacturing operations.

Ngu Truong, managing partner of law firm Vilasia

The rise of e-commerce and digital technology has also boosted demand for logistics and warehouse space. Investors are jumping on this trend, looking to buy assets or companies with strong growth potential in the industrial real estate sector.

The government’s investment in infrastructure, like roads and ports, has made industrial zones more favourable to access and more appealing to investors.

With high demand for industrial spaces and the potential for steady long-term returns, these assets are particularly attractive to both local and foreign investors.

With only three months left, how has Vietnam’s M&A for 2024 fared so far?

Although I don’t have the latest data, I can give a general view based on earlier trends this year. The Vietnamese M&A market has been fairly strong despite global challenges.

However, the pace of deals might have slowed a bit compared to previous years, due to factors like global inflation, geopolitical tensions, and tighter monetary policies around the world.

Do you think foreign investors are increasing their M&A transactions here, given how hard it is for local businesses to survive in the face of a difficult economic outlook?

Foreign investors often see M&A as a quicker way to enter the market or grow their presence compared to building new projects from scratch. Many also see the current economic challenges as a chance to buy assets at better prices.

Yes, foreign investors are stepping up their M&A activities in Vietnam. Tough economic conditions are putting pressure on local businesses, leading some to seek outside capital and strategic partnerships to keep going and expand.

For foreign investors, this is a chance to get into the market or grow their presence at more attractive valuations. They bring not only money but also expertise, technology, and global connections. This can work well for both sides, as local companies get the support they need while foreign investors secure a foothold in a growing market.

Which fields will engage investor appetites going forward?

Several sectors are likely to draw a lot of investor interest in the coming years. With the rapid adoption of digital technologies, areas like fintech, e-commerce, and IT services are booming. Investors are keen on companies driving innovation in these spaces, including healthcare and pharmaceuticals, education, renewable energy, and real estate.

The expanding middle class and growing population are increasing the demand for quality education, making investments in educational institutions and edtech platforms attractive.

For the renewable energy sector, Vietnam’s commitment to sustainable development is opening opportunities in solar, wind, and other green energy projects in the logistics and supply chain management sector, and the growth of e-commerce and international trade is driving demand for efficient logistics and supply chain solutions, making this a sector of strong interest for investors.

The new real estate business laws have made it more challenging for foreign investors to directly access land in Vietnam.

Additionally, land prices are expected to rise, putting further pressure on local investors. With fewer opportunities for lump-sum payments for land, financial planning is becoming more difficult for businesses.

M&As are always an attractive option for foreign investors, as they help cut through the red tape, allowing them to save time and enter the market more efficiently. By acquiring companies with existing assets, foreign investors can bypass many of the legal hurdles.

Vietnam well-placed to remain strategic M&A leader A number of potential deals in the pipeline signifies bright prospects for Vietnam’s mergers and acquisitions landscape.

Vietnam tries to buck trends in M&A Despite a slump in global merger and acquisition transactions, Vietnam witnessed a significant uptick in large transactions in the first half of 2024, with robust deal flow in key sectors and the rise of strategic acquisitions.

Domestic investors could benefit as foreign capital targets Vietnam Vietnamese businesses continue to benefit from the economic wave of foreign investment shifts, driving the development of the stock market.