Strategies shine through in M&A deals

December 01, 2021 | 15:19
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Despite pandemic disruptions, high-growth industries continue to attract investor interest in mergers and acquisitions.
Strategies shine through in M&A deals
Companies looking to snap up others are taking new views after wide global changes in the past two years. Photo: Shutterstock

Singapore’s Mapletree Logistics Trust last week announced a proposed acquisition of three logistics properties in Vietnam at a value of $95 million. The properties are being acquired from Mapletree Investments at a 0.5 per cent discount. The deal is part of the company’s buying spree of 17 modern Grade-A logistics assets with an average age of 1.6 years in China, Vietnam, and Japan.

Ng Kiat, CEO of Mapletree Logistics Trust, said, “The pandemic has highlighted the importance of logistics and placed greater emphasis on supply chain resiliency, fuelling demand for modern logistics space. The acquisition of these assets position us well to capture structural trends.”

Likewise, B.Grimm Power PCL, Thailand’s leading industrial power producer, has spent $7.1 million to scoop up an 80 per cent stake in Huong Hoa Holding JSC, developing Huong Hoa 1 wind project with a capacity of 48MW in the central province of Quang Tri.

The project is being developed under a power purchase agreement with Electricity of Vietnam. B.Grimm and local partner Truong Thanh Energy and Real Estate JSC will begin collaborating on the wind project imminently.

Que Vu, partner at law firm Rajah & Tann LCT, told VIR that both local and foreign investors are eyeing industrial real estate as they may foresee a new wave of factories and investors moving out of China. Another potential target for investors is hospitality real estate as they expect a resumption of tourism demand. Meanwhile, securities companies are also attractive to investors as the Vietnam Index has continuously increased its points and the number of new accounts opening is still increasing significantly.

“Deep-pocketed players with the right M&A strategy can take advantage of this year’s pandemic developments,” Vu said.

A report by international law firm White & Case pointed out financial services top the value table in 2021 so far with a total of $1.5 billion, including SMBC Consumer Finance’s acquisition of FE Credit and Bank of Ayudhya’s purchase of SHB Finance. Meanwhile, the industrials and chemicals sectors generated the most deals – a total of seven deals announced during the first three quarters of the year has already overtaken 2020’s annual total.

Dealmaking within the electronics space resulted in some sizable deals, such as South Korean Sunji Electronic’s $47.7 million acquisition of Bangjoo Hi-Tech, a manufacturer of electronic components and circuit boards. Vietnam continues to establish itself as a regional hub for electronics production, with the country’s electronics exports climbing from $47.3 billion in 2015 to $96.9 billion just before the pandemic emerged, ranking it 12th worldwide.

Potential targets in the tech sector have been highly sought by investors to future-proof any shocks. KVision, the investment arm of Thai Kasikornbank, plans to conclude two more transactions in Vietnam this year, as the nation has emerged as the fund’s core focus market in Southeast Asia.

Giang Tran Minh Thanh, country manager of KVision in Vietnam, said that the fund is committed to heavily investing in Vietnam over the next few years. KVision is looking for tech startups in industries that can serve consumers and digitalise traditional industries including edtech, medtech, fintech, and e-commerce.

Kvision poured $61 million into Sendo in 2019 and, during the pandemic, also invested $40 million in KiotViet and another sum into SeedCom. Its companies like Sendo, KiotViet, and SeedCom have supported micro, small, and medium-sized enterprises to embrace digitalisation trends during the pandemic.

Meanwhile, Society Pass went public on the Nasdaq on November 9 after announcing the acquisition of Leflair’s luxury e-commerce platform back in June. The number of shares offered is almost 2.9 million, with the total pricing announced to be $26 million as indicated at Nasdaq.

Seck Yee Chung, partner at Baker McKenzie, said, “Given the ongoing pandemic and the disruption to many businesses and across various industries, and the emergence of new business models or spending habits, investors are likely to be more circumspect and take a longer-term view when considering the value and attractiveness of these companies. It is just because a company has existed for a long time or is well known, does not in itself create value.”

By Thanh Van

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