Singaporean M&As hold wide promise

A rooftop solar farm installed by Sembcorp in VSIP Binh Duong in the southern province of Binh Duong

In mid-July, Singapore-headquartered Levanta Renewables, backed by Actis, announced that it is acquiring a 28.7MWp rooftop solar system from related companies of Tien Nga JSC, a major logistics provider in Vietnam. The transaction is expected to close in the first quarter of 2025.

Located in the southern province of Dong Nai, the system is one of the largest single-site rooftop solar installations in the country, spanning nearly 200,000sq.m of rooftop surface. The project is expected to generate over 34GWh per year, supplying green energy to Vietnam Electricity under long-term power purchase agreements.

Rahul Agrawal, head of Energy for Southeast Asia at sustainable infrastructure investor Actis, said, “The acquisition of this rooftop solar portfolio marks another step forward for Levanta Renewables in its ambition to build out 1.5GW. Not only is Levanta accelerating the energy transition in Vietnam, but it is doing so by supplying clean, reliable, and cost-competitive energy to commercial and industrial customers, powering the country’s economic growth.”

In June, Singapore’s Sembcorp Industries announced that its wholly owned subsidiary, Sembcorp Solar Vietnam, completed the acquisition of majority interests in three out of four subsidiaries of Gelex Group. With the completion of these three transactions, Sembcorp has added a combined 196MW of operational wind and solar assets to its portfolio.

Additionally, Sembcorp will acquire a 73 per cent stake in a fourth subsidiary of Gelex Group, expected in the second half of 2024, which owns a 49MW hydropower asset. Upon completion of the four acquisitions, Sembcorp’s gross renewable energy capacity in Vietnam will be 455MW, while the group’s total gross renewable energy capacity will reach 14.4GW.

Elsewhere, Singaporean company Great Master received approval to acquire a 20 per cent stake in Trung Khoi JSC, an industrial park developer in the central province of Quang Tri, in July. Meanwhile, Singapore-based Atlantic, Gulf and Pacific LNG has acquired a 49 per cent stake in Cai Mep liquefied natural gas terminal, located in Ba Ria-Vung Tau province in the south.

Seck Yee Chung, partner at Baker McKenzie Vietnam told VIR, “Foreign investors continue to be key drivers of Vietnam’s merger and acquisition (M&A) market, which is primarily driven by strong interest in Vietnam as a growth market. Singapore remains one of the most active players in Vietnam’s M&A landscape.”

According to the Ministry of Planning and Investment, Singapore ranked third (behind South Korea and China) among foreign investors in the first half of 2024, with 142 M&A deals worth about $349 million.

“Although Singaporean investors’ main focus in Vietnam for the first half of 2024 was on new ventures, we remain confident that investors from Singapore will continue to bolster their portfolios by securing new strategic deals in Vietnam as an emerging Southeast Asian market,” Chung said. “With Vietnam’s ageing population and rising middle-class increasing the demand for healthcare services, the trend of substantial deals in the healthcare sector will likely continue. Similarly, the real estate and construction sector is attractive due to Vietnam’s newly updated legal framework and the relocation of many production facilities.”

With increased production in Vietnam, the demand for industrial and manufacturing real estate is robust. This is exemplified by the agreements between Keppel Corporation Ltd. and Keppel Vietnam Fund to acquire a 49 per cent interest in two adjacent residential projects in Thu Duc city of Ho Chi Minh City from Khang Dien Group for an aggregate consideration of approximately $138 million. Another potential sector is energy and infrastructure, driven by Vietnam’s strong commitment to transitioning to renewable energy, its pledge to achieve net-zero emissions by 2050, and the introduction of the Power Development Plan VIII, Chung added.

Eric Johnson, partner at Freshfields Bruckhaus Deringer, highlighted the factors driving Singapore M&A deals.

“Singapore has been a key source of foreign investment throughout emerging markets in Southeast Asia, including Vietnam. Key Singaporean investors include Singapore’s sovereign wealth funds, major real estate and energy companies, and Singapore-based venture capital funds, Johnson said.

Due to Singapore’s status as a regional financial centre and the efficiency of Singapore’s common law legal system and treaty network, many non-Singaporean companies from the US, Europe, and Japan, as well as global private equity funds, invest in Vietnam via Singaporean subsidiaries or special purpose vehicles, according to Johnson.

“We’ve also seen emerging tech companies in Vietnam that need to raise capital setting up Singapore parent companies to facilitate efficient offshore fundraising from their venture capital backers,” Johnson said.

“The Vietnamese legal system cannot easily accommodate many of the basic investment structures commonly used in venture capital, such as convertible notes and simple agreements for future equity in other markets, and even preferred equity investments in Vietnam involve unnecessary legal uncertainty and burdensome procedures. As a result, many venture capitalists currently prefer not to invest directly into Vietnamese companies.”

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