Do Van Su - Deputy director general, Foreign Investment Agency
Business relocation is caused not only by the pandemic this year, but also over previous years as some countries became conflicted in terms of trade. Thereby, some solutions on investment and trade protection have been raised, and multinational corporations relocate to avoid tax. COVID-19 has not made anyone “wake up”, but some corporations and even economies have also been startled and realised that dependence on only one country or location is too risky. COVID-19 is simply pushing forward the process of making decisions faster.
In order to welcome a new investment wave, Vietnam has been ready on infrastructure, human resources, and policies. M&A-related laws on Securities, Enterprises, and Investment have also just been amended within the past year, as well as that on public-private partnerships.
Thanks to these, there are new methods in which investors can enjoy economic benefits and new ways for them to contribute capital and buy shares in an enterprise – especially enterprises and sectors that overseas investors are not allowed to hold more than a certain ratio in. I believe that this will be an attractive investment channel for them in the time coming.
Tran Thi Bao Ngoc - Head of Prestige Wealth Management, VPBank Securities
Over the past few years, many finance companies in Vietnam are working with deep-pocketed international partners to strengthen their operations. Furthermore, to keep up with ever-evolving technology, consumer finance companies in Vietnam have to be well-positioned to engage with the new wave of digitally-empowered customers.
Foreign investors will place their focus on digitally-led firms since they could easily make credit accessible to individuals across the country. Currently, many consumer finance companies are backed by local banks, such as FE Credit and VPBank, SHB Finance and SHB, and HD Saison with HDBank.
I do believe that forthcoming M&A deals from foreigners will facilitate domestic consumer finance companies to deliver better services to customers with better cushion, ample liquidity resources, and a stable operation structure.
Fabrice Carrasco - Strategic Initiatives regional director, Asia Kantar Worldpanel
Vietnam is anticipated to remain active in M&A activities to continue flourishing. There are key reasons why we think the M&A market will be further boosted.
With big human resources and low cost, Vietnam will gain more attention from foreigners partly due to the shift from China to developing Asian markets and the dispute between the US and
China. In addition, there is positive outlook on economic growth and consumer confidence during COVID-19 time and after the pandemic here.
Improvements from the government in terms of investment regulations to attract investors, as it is one of the key economic growth drivers, and will be a vital lever to recover the economy faster.
The development plans and aggressive expansion from both state and private businesses for suburban and rural areas hold great promise to tap into. Last but not least, fast-moving consumer goods and food and beverages – in particular both take-home purchases and out-of-home consumption – are on the upward trend.
There are two main trends that will be more likely to occur in 2021 and beyond. Firstly, businesses will aim to expand both horizontally and vertically. This means there will be cross-category and cross-industry M&A deals. Secondly, cross-border acquisitions are expected to dominate M&A deals in the coming years yet domestic cooperation will emerge to strengthen the competitiveness of local players.
Nguyen Thi Van Khanh - Senior director, Capital Markets, JLL Vietnam
Real estate is still one of the major sectors for M&A deals. Investors can buy and expect to profit thanks to the increase of price. This is still the brightest destination for foreign direct investment, and M&A in particular.
Industrial property is a segment being paid most attention to recently. Foreign investors are ready to pour around $300-400 million into this segment. They see that demand on industrial property is quite huge and enough good for investment due to the trend of relocation.
Numerous Japanese investors are also exploring Vietnam’s real estate and logistics. They are good developers in their home country already, and looking for some opportunities here to develop their projects, following in the footsteps of some senior developers like Daiwa House, Sojitz, and Sumitomo, who are doing good business in Vietnam.
In the first 10 months of the year, although the number of deals decreased sharply on-year, the value is still large with some of them with hundreds of millions of US dollars, which has lured in all the attention of foreign investors.
In the last two months of the year, JLL expects some deals at the end of negotiation will be unveiled. Next year, if the pandemic is managed well, a lot of investment from the regional countries like Japan, South Korea, and Singapore will upsurge and pour into Vietnam’s real estate.
Pham Duy Khuong - Managing director, ASL LAW
In past years, the flow of money mobilised from partners to perform M&A deals in Vietnam has decreased and the amount of capital has mainly come from foreign investors. In order to promote more M&A activities, in my opinion, it depends on the recovery of the market and the control of COVID-19.
The businesses most severely affected in the past year have more potential for the strongest M&A activities, especially with businesses of real estate and tourism services such as restaurants and hotels.
For other sectors, M&A activities are still on a good trend – for example, the retail sector has always attracted investment capital from foreign investors for decades, followed by the finance and banking sector, real estate, tourism, and hotels and restaurants.
The theme of the Vietnam M&A Forum for 2020 correctly reflects the reality and the problem that Vietnamese businesses are currently concerned about. We have successfully controlled the pandemic, and now we have to come up with development solutions in the context of more barriers than in the normal period. Legal issues, practical problems, and awareness of risks in the COVID-19 period are the issues that businesses are looking forward to discussing at this forum.
Nguyen Quoc Viet - CEO, BTCvalue Valuation JSC
There are two types of investors participating in the M&A market. Firstly, there are strategic investors buying enterprises’ core operations. The number of strategic investors has gone down recently due to difficulties in information provision and strict requirements related to business supervision and governance in M&A activities.
Second are financial investors who buy assets with land use rights and land lease rights from businesses. The greatest concerns from financial investors are in real estate. However, in light of current regulations on state-owned enterprises, those on valuation have become increasingly stringent. When the sellers reflect all expectations in the price, financial investors would feel that what they have on offer is less attractive.
Two solutions would exist in this situation. First is finding the right strategic investors who are really keen on businesses and would accompany companies on their development journey, rather than just paying regards to their assets. Secondly, the regulations on valuation should be made more open to fuel investors’ interest.
Vit Vatanayothin - Partner, Baker McKenzie Bangkok
Over the last 15 months, Thai investors have been acquiring more and more ground-mounted solar projects and offshore and onshore wind projects – whether in the pre-construction phase or operational phase.
At the same time, Thai investors are looking to have the existing financing of the acquired project company refinanced by much cheaper offshore financing granted by multilateral banks and Thai and international financial institutions.
Furthermore, we are also seeing Thai and international financial institutions granting project take-out facilities to Vietnamese project companies acquired by Thais.
Since there is no foreign shareholding restriction in a project company operating a renewable energy business in Vietnam, and there are no other key legal obstacles which will discourage the acquisition, the acquisition in this space seems to be keeping momentum and is still inviting for newcomers.
However, the continuance of business operations post-acquisition and the bankability and technical issues raised by financial institutions at the subsequent project take-out financing stage (through their due diligence exercises) could become impediments and pain points for the acquirer if both legal and technical issues are not properly raised and addressed at the acquisition stage.
Despite the pandemic and slowdown in the acquisition of ground-mounted solar projects and project financing, we expect to see a trend in acquisition activities by Thai investors in the offshore, nearshore, and onshore wind space, followed by greenfield project financing or project take-out financing activities.