M&A market poised for “New Thrust, New Era”

Today's press conference announcing Vietnam M&A Forum 2018

Three sectors, namely customer goods, retail, and real estate, are expected to be targeted sectors for M&A deals.

According to the report released at the press conference organised by VIR and AVM Vietnam this morning to officially announce Vietnam M&A Forum 2018, during the past ten years, 4,000 M&A deals were completed with the total value of approximately $48.8 billion.

In 2017 alone, M&A activities reported numerous record deals, including ThaiBev’s purchase of 53.59 per cent of Sabeco’s stake for $5 billion, pushing the total value of deals to $10.2 billion, up 175 per cent on-year.

For the whole year of 2018, the total value of M&A deals is expected to reach $6.5-6.9 billion, up 15.3 per cent compared to the figure of last year, excluding the value of ThaiBev’s purchase of Sabeco and equaling 58.8 per cent compared to the figure of last year, including the value of ThaiBev’s deal.

The breakthrough in M&A deals in the second half of 2017 and first half of this year was thanks to the government’s policy reforms as well as the government’s efforts to accelerate the equitisation process of the authorities as well as state-owned firms.

According to Le Trong Minh, editor-in-chief of Vietnam Investment Review and head of the Organising Board of Vietnam M&A Forum 2018, there are still ample opportunities for M&A deals.

On the side of state-owned enterprises (SOEs), only 8 per cent of the total state-owned stake in local firms was sold through a number of large-scale deals, like those involving Sabeco and Vinamilk. In the near future, if the government and local firms continue to accelerate the equitisation, there will not only be a thrust but also a breakthrough in M&A activities.

Regarding private firms, more and more foreign investors are paying attention to local firms in real estate, banking, retail, food processing, and fast-moving consumer goods, as proved by numerous recent deals, such as those of Vinhomes and Techcombank.

“In order to reach the most benefits from acquisitions, Vietnam should have smart sale plans with specific strategies. The holders of the state-owned stake should refrain from offering massive stakes in a single sale, but should also not schedule too small sales,” said Phan Duc Hieu, deputy director of the Central Institute for Economic Management (CIEM).

Along with the opportunities, M&A activities will also have to face challenges, including the withdrawal of the US from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the trade war between the US and China, obstacles in SOE equitisation, the low quality of Vietnamese firms, as well as the scale of the economy.

"In order to create a breakthrough for the M&A market in the backdrop of opportunities and challenges, the Organising Board of Vietnam M&A Forum 2018 chose the theme “New Thrust, New Era.” Through the theme, industrial experts and business leaders will focus on discussing challenges as well as solutions to stimulate investment capital via M&A deals. Besides, this year’s forum will also review the forum’s 10-year journey accompanying the M&A market in Vietnam," Minh said at the press conference.