M&A transactions in Vietnam have seen steady growth from 2003, fostering the country as a potential hub for economic activity which has seen strong development in recent years, particularly after Vietnam officially became a member of the World Trade Organization (WTO), writes Hoang Nguyen Ha Quyen, Nguyen Anh Tuan & Nguyen Xuan Thuy, LNT & Partners.
Featuring crowded markets, stable economic growth and rising income per capita, Vietnam is still considered as an attractive destination for investors.
Despite setbacks of the global financial crisis from 2007 to 2009, corporate investment into and within Vietnam has rebounded, with the value of M&A transactions growing from 15-30% annually until now. In 2009, Vietnam had a total of 295 M&A deals with a total value of approximately US$1.14bn. By 2010, the number of deals had decreased slightly to 245 but with their total value escalating to US$1.75bn. In 2011, the number of M&A deals in Vietnam reached 266 with a total value of US$6.25bn, up 3.5 times from the previous year, and in only the first quarter of 2012, the value of M&A deals has risen to over US$1.5m with 60 deals.
The recent trend of M&A shows an increase in value with a decrease in the number of transactions. This may be partly explained by the fact that high interest rates (25% per annum at the moment) amid economic and financial crises have led to many distressed assets in the country. Meanwhile most domestic companies rely on loans as mobile capital and, in certain cases, to create fixed assets. This offers an opportunity for investors, including multinational companies (MNCs) and private equities, to penetrate into Vietnam through M&A.
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