FPT betting on M&A to go global

The strategic agreement between FPT and its Slovakian partner was witnessed by Prime Ministers Nguyen Xuan Phuc and Robert Fico

At the gala ceremony to honour exemplary mergers and acquisitions (M&A) in Vietnam in the past decade from 2009 to 2018 as part of the recent Vietnam M&A Forum 2018 hosted by VIR under the patronage of the Ministry of Planning and Investment, FPT was called to the stage in three award categories.

First, it was named among the 10 companies with the best M&A strategies in the past decade. Second, it carved out a spot among Vietnam’s top 10 M&A deals during 2017-2018 in the acquisitions category. And third, it was honoured among Top 3 M&A deals during 2017-2018 in information disclosure.

Of the awards, the tech giant left the deepest impression with its most recent deal in which it spent about $50 million on acquiring a 90 per cent stake in Intellinet, becoming the first-ever Vietnamese tech firm to acquire a US consultancy firm.

In the deal, FPThas paid $30 million cash, while the remaining will be paid later based on Intellinet’s business results in the next three years.

FPT had also chosen to unveil its first deal in the US in a special way through a direct teleconference concurrently held in Vietnam and the US in the presence of more than 30 media agencies.

At the event, FPT chairman Truong Gia Binh said, “FPT has recognised the tremendous demand for strategic consultancy and digital conversion in doing business with global firms amidst Industry 4.0. Our strategic investment into Intellinet will help the group meet this demand. We are ready to provide overall digital conversion solutions to global companies, helping to bolster Vietnam’s status on the world tech map.”

At the time of the acquisition, Intellinet was one of the fastest growing technology consultancy firms in the US, with about $30 million revenue in 2017. The company serves more than 200 customers, many of whom appear on the Fortune 500 List. Meanwhile FPT holds a rich customer base with about 80 customers on the Fortune 500 List and 400 major global customers.

By acquiring 90 per cent of Intellinet, FPT expects to double its revenue in the US in the next 12 months to $100 million.

Truong Gia Binh stated that besides the US, the group’s further targets might be Japan, Singapore, France, the UK or Germany. For years, FPT has been wielding M&A as a fulcrum to materialise its global strategy.

The group’s M&A approach dates back to 2013, as chairman Binh said at the group’s strategic conference late that year, “One of the top means of realising FPT’s global strategy will be M&A.”

This orientation was once again affirmed at the group’s 2014 annual general shareholders’ meeting (AGM). About two months after the AGM, in June 2014, FPT Software, a member unit of FPT Group, bought an IT firm in Slovakia to set a foothold in Europe.

The deal started producing profit one year later and served as the key element driving FPT’s growth in Europe.

The group posted a 117 per cent jump in revenue in Europe in 2014 and 56 per cent in 2015. Early this year, FPT Slovakia signed a $100 million contract with FPT Software on providing solutions based on SAP technology, the Internet of Things, and digital conversion platforms to InnogySE, a member of European energy company RWE.

“Overseas M&A continues to play a major role in FPT’s go-global strategy, with a budget of about $50 million per year. We will continue searching for suitable partners in key markets, such as Japan and Europe in the future,” said Nguyen The Phuong, FPT’s deputy general director.