Long-term impetus sought for Japanese ambitions in mergers and acquisitions

Japanese groups in particular are being cautious but aggressive when it comes to new deals, Photo: Shutterstock

Chubu Electric Power Co., Inc. last week announced that it had officially acquired 20 per cent of Bitexco Power Corporation (BPC) through Chubu Electric Power Co. Netherlands B.V., a wholly-owned subsidiary of Chubu.

BPC, a subsidiary of Bitexco Group, owns and operates 21 hydropower plants and one solar power plant in Vietnam, with a total gross generation capacity of over 1,000MW, as of February. This capacity makes BPC a leading renewable energy company focused on hydroelectric and solar photovoltaic generation in the Vietnamese private sector.

“With the anticipated continuing expansion of renewable energy in Vietnam, by becoming a vital partner of BPC we will contribute to the realisation of a carbon-neutral society,” said Hiroki Sato, executive officer of Corporate Planning and Strategy at Chubu.

In October, RareJob, Inc., which utilises human-related data to develop global talents, concluded a capital alliance agreement with Dream Viet Education JSC, which runs Kynaforkids – an online English language training platform for students and adults in Vietnam. The financial terms of the transaction were not disclosed.

The investment in the Vietnamese company is part of RareJob’s ongoing global expansion. The Japanese firm said that Vietnam has great potential in its English learning market and Dream Viet Education is the best partner to expand its business.

The impact of the pandemic has forced nearly all children to be educated online, rapidly growing the need for robust online learning models. By taking advantage of the situation, Dream Viet Education has been expanding its online English tutoring solution under the Kyna English 1-1 brand, both domestically and internationally, growing the number of users steadily.

Samuel Son-Tung Vu, partner at law firm Bae, Kim & Lee Vietnam said, “As many enterprises struggle due to the pandemic, investors with big reserves have more opportunities to select suitable candidates for their long-term strategy. These types of investors know that once Vietnam and the global supply chain recover, the economy will grow rapidly. Therefore, they can be cautious in choosing the company that can fit their portfolio but they can also be aggressive in spending more if the valuation can be justified in the long term.”

Commenting on the key areas to attracting Japanese mergers and acquisitions, Vu explained that the Japanese yen has maintained stable and interest rates in Japan have remained relatively low for some time. Therefore, the most attractive areas would be banking and financial services, including consumer finance. He explained that the large population and low market infiltration rate in banking and finance make Vietnam a very attractive investment destination for Japanese investors, and not just during the pandemic.

“As the traditional brick and mortar banking and financial services are consolidating, it is exciting to see the next stage of development in the area of fintech and other technological-based solutions,” Vu added.

To illustrate, the largest deal of the year was Japan-based SMBC Consumer Finance’s $1.4 billion acquisition of 49 per cent in consumer loan provider FE Credit. The deal is part of SMBC Group’s move to seek further growth opportunities in Asia, with FE Credit currently owning an estimated 50 per cent share in Vietnam’s consumer finance market.

Meanwhile, MUFG Bank’s arm, Thailand-based Bank of Ayudhya Public Co. Ltd, also spent $69 million to purchase SHB Finance from Saigon-Hanoi Commercial Joint Stock Bank. As a result of the mega deals, the financial services sector attracted the highest deal value across all sectors during Q1-Q3 2021, with a total of $1.5 billion in deals with disclosed values recorded, according to a report by international law firm White & Case.