Strategic investment deals ready to take off

Strategic investment deals are the talk of the town as foreign firms look to take advantage of the funding crisis at Vietnam’s firms. The general director of a reputable Japanese-backed consulting company said major foreign investors’ acquisition demand for Vietnamese enterprises had jumped in recent months. The buyers were mostly Asian and were cashed up to the tune of $1 billion and upwards.

“On average, every month my firm is receiving one enquiry about local enterprises from such investors. That’s quite a big figure,” he said, adding that the merger and acquisition deals having his parent company’s consultancy last year was worth up to $300 million.  

The executive expected strategic investment deals would increase in number and scale in 2012, a year he saw as “a turning point” for local enterprises in term of corporate governance as Vietnam was witnessing accelerated restructuring across the economy.

The trend towards strategic investment deals in the Vietnamese capital market is being fuelled by soaring demands for funding at local enterprises and government projects in the wake of the nation’s squeeze on credit.

Many intermediaries in these deals, including consulting firms, fund management firms and brokerage firms, are aggressively hunting out deals by matching foreign partners with valuable local enterprises and government projects.

The general director of another advisory firm revealed that his firm was consulting for a Korean private company wanting to set up a waste treatment project in Vietnam. The project might be worth up to $30 million and would be funded  by Korean official development assistance (ODA).

This consultative company was set up on the expectation of a surge in strategic investment deals by a group of senior financiers who left securities companies amid the stock market downturn.

“The slump of the securities market and tightening credit are actually opportunities for industry investors to tap into the Vietnamese market,” said the firm’s general director.

Demand for expanded operations tends to increase this year among Asian foreign investors, particularly Korean and Japanese firms, according to industry experts.

“Japan and Korea are among the few countries only slightly impacted by the global economic downturn. Their growth has already slowed, so they have increasing demand to expand their operations to other nations particularly Vietnam,” said the chief advisor for a fund management company. “I estimate the possibility of successfully matching for strategic investment deals will be bigger in 2012.”

One of the most remarkable strategic investment deals last year is PVI selling a 25 per cent stake to German insurer Talanx, although the Vietnamese insurance giant failed to raise funds from its financial partner Oman Investment Fund.

“There will likely be a strong movement towards the underground capital market, stirred by strategic investors,” said the chief advisor.