M&A deals in Vietnam reach nearly $5 billion in H1

Despite emerging from the pandemic, Vietnam's M&A sector had a strong start to the year.

Du Vinh Tran, EY’s Indochina strategy and transactions leader, said: “In the Vietnamese market, we still observed a strong growth of PE and VC investments during the first half of the year despite some turbulence in equity and debt markets.”

According to an analysis of M&A data by EY, the total deal value transacted in the first half of 2022 in the country was almost the same as the total for the whole of 2021 ($4.97 billion).

"However, deal activities may slow down in H2 as investors become more conservative about several macro trends impacting Vietnam’s economy. While the country’s fundamentals are still strong, we are not immune from such negative movements as the downturn in the capital flow from developed countries to emerging markets, geopolitical tensions, and high inflation. Those trends cast doubt on investor confidence in Vietnam and many other markets,” said Du.

However, the technology sector has not been as strong as expected, although it still has strong interest from investors.

"There were only four tech-related deals announced in H1 as reported by Mergermarket, compared to seven deals in the previous cycle,” Du said. “A sizable one in H1 was a deal of Vietnam-based e-commerce solutions provider OnPoint, worth $50 million, with an indirect wholly-owned subsidiary of Temasek. The deal targeted Vietnam’s fast-growing e-commerce industry and became the largest private fundraising round in Southeast Asia’s e-commerce-enabler industry in the last five years.”

In recent years, the main technology fields that have attracted a large amount of investment capital in Vietnam included e-commerce, fintech, edtech, logistics, and business automation.

Globally, M&A activity in H1 has been resilient, despite major geopolitical and financial headwinds.

With 2,274 deals with a total value of $2.02 trillion, M&A in H1 may have seen a drop compared to this time last year, down 27 per cent by value and 18 per cent by volume, but activity is up compared to the average of the last M&A cycle (up 35 per cent and 13 per cent respectively).

Andrea Guerzoni, EY’s global vice chair of strategy and transactions, said: “A trend that I expect to become a mainstay in the coming months is the use of private capital in both the equity and debt portions of transactions. Driven by the vast amount of private capital available and rising interest rates, I expect this trend will continue making the role of private markets even more fundamental to the global economy."

“A barrier to this flow of deals will be if conditions deteriorate to the extent that debt financing dries up or becomes prohibitively expensive. While global M&A activity has proved remarkably resilient in the face of major geopolitical headwinds, it is uncertain whether it can sustain further shocks, whether that is further lockdowns, heightened geopolitical tensions or a recession,” he said.

Assessing Japanese M&A deals in a turbulent period Vietnam’s merger and acquisition (M&A) market remains appealing to Japanese investors despite global uncertainties. Masataka “Sam” Yoshida, head of the Cross-border Division of RECOF Corporation and CEO of RECOF Vietnam Co., Ltd., talked to VIR’s Thanh Van about the wave of Japanese M&A in Vietnam at this turbulent time.

Venture capital into local startups reached record high of $1.4 billion Vietnam's innovation and startup scene has rebounded and reached new heights. with a record number of $1.4 billion in venture capital invested into Vietnamese startups in 2021, according to the report by Vietnam National Innovation Center and Do Ventures.

Vietnam boasting buoyant real estate M&A activities The real estate market is undergoing somewhat of a restructure and now is being considered an ideal time for foreign businesses to find opportunities for mergers and acquisitions with the domestic sector – while domestic enterprises are also more open to investment to relieve pressure.