M&A market braces for policy slowdown

In late April, Malaysia-based private equity firm Creador announced the acquisition of a 13 per cent stake in FPT Long Chau Investment. The deal marks Long Chau’s first-ever fundraising round and Creador’s second investment in Vietnam.

Long Chau has quickly scaled up its chain from four stores in 2017 to more than 2,000 pharmacies and over 140 vaccination centres nationwide.

“Very few businesses achieve what Long Chau has - national scale, brand trust, and deep community presence,” Creador CEO and founder Brahmal Vasudevan said. “Long Chau stands at the forefront of making healthcare accessible and affordable for all. We are proud to support this mission and be part of Long Chau’s continued impact and growth.”

In early April, Qualcomm also acquired MovianAI, the former generative AI division of VinAI Application and Research and a part of the Vingroup ecosystem.

“This acquisition underscores our commitment to dedicating the necessary resources to research and development that makes us the driving force behind the next wave of AI innovation,” said Jilei Hou, senior vice president of engineering at Qualcomm. “By bringing in high-calibre talent from VinAI, we are strengthening our ability to deliver cutting-edge AI solutions that will benefit a wide range of industries and consumers.”

According to data by the Foreign Investment Agency under the Ministry of Finance, investments in the form of capital contributions and share purchases have grown strongly since the beginning of the year. Foreign investors conducted 810 capital contributions and share purchases in the first quarter of 2025 with a total value of $1.49 billion, up 83.7 per cent on-year.

However, such activities have an uncertain future amid the current US tariff situation. Masataka “Sam” Yoshida, head of the Cross-border Division at RECOF Corporation, told VIR that the US has created a new wave of uncertainty which is rippling through merger and acquisition (M&A) markets, including Vietnam’s.

“The issue is not just the tariffs themselves, but the unpredictability surrounding how and when they may be applied or changed,” Yoshida said. “In times of uncertainty, debt becomes more expensive, valuations are harder to justify, and dealmaking slows. Confidence at the executive level also takes a hit, making it difficult to proceed with acquisitions, especially for companies reliant on cross-border trade.”

Companies such as Nike and Adidas, which rely on Vietnam for manufacturing, have already seen the impact, he added.

“Other Vietnamese companies may also face valuation pressure due to their exposure to the US market. While the US administration has set a July deadline for new bilateral trade agreements, investors are more concerned about the risk of Donald Trump reimposing sanctions at any time. This makes long-term planning difficult, and as a result, M&A activity is likely to remain cautious in the near term,” Yoshida explained.

In the same vein, Seck Yee Chung, partner at Baker McKenzie Vietnam, said that the imposition of US tariffs will likely have a profound influence on M&A activities in Vietnam.

“Another possible setback stemming from this is that, with the undermining of Vietnam’s competitiveness in the US market, investors may determine that M&A deals in Vietnam are no longer lucrative enough due to reduced export volumes and market share loses. These disruptions will pose certain challenges for M&A activities in Vietnam as companies are forced to reconsider their strategies,” Chung said.

According to experts, US tariffs may also create opportunities for agile players to capitalise on the shifting market dynamics. Domestic companies can leverage this development to diversify their markets, positioning themselves as attractive targets for foreign investors looking to mitigate risks.

Meanwhile, foreign investors may see this as an opportunity to restructure their supply chains by acquiring assets in Vietnam. This strategic realignment can drive growth and innovation in the Vietnamese market, as well as foster a more resilient economic environment, enabling companies to thrive in the face of adversity.

The Vietnam Private Capital & Innovation Report 2025, released in April, pointed out that Vietnam’s innovation and private capital market recorded $2.3 billion in 2024 across 140 deals, with deal count remaining relatively stable in both venture capital and private equity despite a decline in capital deployed.

Buyout transactions also dominated, accounting for $1.7 billion of total private equity investment, reflecting investor preference for mature, cash-generating businesses in a cautious environment.

Meanwhile, the 2025 Private Equity Report published by Grant Thornton Vietnam in March highlighted that the first quarter of 2025 brought more upbeat signals. Vietnam’s private equity investment market recorded five completed transactions with a total deal value of $76 million, which is more active compared to the same period in 2024. While the number of deals is lower, the average deal size rose significantly.