M&A amid the pandemic – Growing the value chain

VIR organised a virtual seminar on M&A activities during and after the COVID-19 pandemic

The M&A amid the pandemic – Growing the value chain virtual seminar was held by Vietnam Investment Review and NovaGroup this morning (October 15) from two locations in Hanoi and Ho Chi Minh City.

It has been two years since the world has been feeling the press of the COVID-19 pandemic. The global economic slowdown has shaken even the largest economies and the most powerful corporations in the world. As a country that is deeply integrated into the global economy, Vietnam also faces many challenges, affecting all aspects of social and economic life.

However, businesses are gradually adaption to the new normal of generating growth while combating the pandemic. Many businesses which have already built solid ecosystems have found their way with development opportunities, even breakthrough achievements. Once again, the pandemic has proven that enterprises must go together if they want to go far. M&A, in this case, is the most effective solution to find reliable companions.

In his opening remarks, Le Trong Minh, VIR's editor-in-chief highlighted the opportunities emerging amid the challenges. With each M&A deal, the parties will benefit and reach toward their goals while growing stronger and larger.

"While we cannot tell for sure when the pandemic will end or how many crises and pandemics will come after it, all businesses are looking for a way to develop," he said, adding that finding the silver lining is the true test of the intelligence and strength of enterprises. "The enterprises that can find a way will dominate."

He said that over the last two years, big corporations in Vietnam were not only leading the fight against the pandemic but were also the most dynamic in restructuring, expanding their ecosystems, and creating value chains through M&A.

NovaGroup is an outstanding example that was highlighted during today's seminar. "NovaGroup did not seem to stop for a second in enlarging itself, but each M&A deal was a result of careful consideration and foresight," said Minh.

Speakers at the Ho Chi Minh City location

So far, M&A has been a favoured channel for foreign investors to penetrate the Vietnamese market. But now, under the new normal, it has also become a means for domestic businesses to rapidly boost their growth. At the same time, more favourable institutional reforms and policies are required for local firms to grow into conglomerates by seizing opportunities and diving into the global market. M&A is an open playing field to realise these ambitions.

In the past, M&A deals were mainly featuring foreign investors on the buyers' side while domestic companies primarily acted as the sellers or the "prey". Things are different now. A string of Vietnamese enterprises has turned the tables to become the "hunter", pursuing ambitions to go regional and global.

Phan Duc Hieu, standing member of the National Assembly Economic Committee said: "The resurgence of local forces is powered by outstanding corporations. Local firms are on a drive to improve their competitiveness in both the domestic and foreign markets. A number of Vietnamese corporations have been actively conducting M&A transactions overseas – and are very wise to do so."

Experts said that Vietnamese companies have long been preparing to step up their M&A game. They have even hired professional teams to support their strategy, which has generated great values for them. Efforts have been made to mobilise capital and identify suitable investment targets.

Tran Dinh Thien, former director of the Vietnam Economics Institute said that M&A is one of the best ways for domestic businesses to restructure operations and grow stronger. "This is a golden opportunity for enterprises after the chaos of the crisis. However, they should carefully consider potential partners and how they can utilise their respective advantages for the benefit of all stakeholders," said Thien.

With the theme of "M&A amid the pandemic - Growing the value chain", the seminar provided views from leading deal makers and experts on "friendly" and effective M&A to create win-win deals and grow value chains. The seminar included two sessions named Turning risks into opportunities - An opening for Vietnamese businesses, and NovaGroup: M&A - Synergy for development.

Participants discussed opportunities for businesses to restructure, expand their ecosystems, build value chains, as well as the strategy and directions of NovaGroup after the pandemic and sustainable synergies.