Vietnam tries to buck trends in M&A

Last week, Tasco Auto announced that it has bought out Sweden Auto Co., Ltd., the sole authorised importer and distributor of Volvo cars in Vietnam. Following the deal, Tasco becomes the importer and distributor of Volvo vehicles. With a network of 90 showrooms nationwide, the acquisition of Sweden Auto consolidates Tasco Auto’s position as the largest automotive distributor in Vietnam.

Vietnam tries to buck trends in M&A, illustration photo/ Source: freepik.com

On July 5, Daiwa House Logistics Trust successfully completed the acquisition of a logistics property in Vietnam, with an estimated total purchase consideration of approximately $19.12 million. Daiwa House Vietnam Co., Ltd. has been reappointed as the property manager for the newly acquired property, under a new term lasting until July 2026. This deal is part of the company’s strategic expansion in the logistics sector within the region.

As of the first half of 2024, the total value of merger and acquisition (M&A) deals with disclosed information reached around $3 billion in Vietnam, according to the data from Mergermarket. Notably, there has been an uptick in larger transactions, particularly in buyout acquisitions, over the past twelve months.

Huong Trinh, partner of BDA Partners, told VIR, “This pattern indicates a robust appetite for significant deals in the market. Strategic investors are actively pursuing expansion by targeting leading companies in Vietnam, while financial sponsors are leveraging substantial dry powder following a slowdown in deal activities over the past two years.”

While M&A signals a recovery, deal values remain below pre-pandemic levels observed in 2021. “This is largely due to the lingering effects of the global economic slowdown, geopolitical risks, and the prevailing political and economic uncertainties in Vietnam. Based on our observation, some large transactions are still running at a slow pace until there’s more clarity on the macroeconomic and political environment,” she said.

So far this year, several key sectors such as healthcare, financial services, and industry have been dominating Vietnam’s M&A market, underscoring a diverse spectrum of investor interests.

“Factors driving these activities include robust economic growth, an expanding middle-class and increasing consumer expenditures, regulatory reforms, and shifts in the global supply chains as influenced by the US-China decoupling, all contributing to a dynamic and active market for mergers and acquisitions landscape in Vietnam,” Trinh added.

Findings by BDA Partners show that healthcare has been a key area for M&A activity as Vietnam focuses on improving healthcare infrastructure and services. Investments include acquisitions of hospitals, clinics, pharmaceutical companies, and healthcare technology firms, reflecting a strategic focus on sector expansion and service enhancement.

Key transactions include Warburg Pincus’ investment in Xuyen A hospital chain, KKR’s majority stake acquisition of Medical Saigon Group, and GIC’s top-up investment in Nhi Dong 315. Meanwhile, financial services has emerged as a key focus for M&A since 2023 as companies are actively expanding market positions to capitalise on growth opportunities. Prominent transactions in 2024 comprise Thai financial group SCBX’s acquisition of Home Credit’s business in Vietnam and Malaysia’s Public Bank Berhad takeover of RHB Securities Vietnam.

In addition, industrials have remained robust with investments focused on diversifying supply chain operations, expanding production capacities, and entering new markets.

“Vietnam has been becoming a prominent manufacturing centre thanks to its strategic location at the centre of Southeast Asia, favourable government policies, and the availability of an affordable labour force. All are contributing to a dynamic deal landscape,” BDA Partners noted.

Foreign investors are increasingly looking at strategic acquisitions to enhance value, diversify their operations, and develop market positions.

Masataka “Sam” Yoshida, head of the Cross-border Division of RECOF Corporation, said 10 transactions were announced between Japan and Vietnam in the first half of 2024, compared with eight in the same period a year ago. The total value recorded $157 million by the four transactions (among 10 in total) with the transaction value disclosed.

Yoshida further noted that Japanese players are less active in the financial and real estate sectors, possibly because of the lack of good investment opportunities as well as their caution in comparison to US, Singaporean, and Thai investors, RECOF noted. “Except for the SMBC/VP Bank and Aeon Financial/PTF transactions, both in 2023, we haven’t seen any sizable transaction by Japanese companies in these sectors since last year,” he said.

Another area to note is startups in IT software development and services. Mynavi Corporation, a HR-focused communications group, has invested in three Vietnamese IT companies every year for the last three years, Yoshida added.

One factor driving the recovery of Vietnam’s M&A is a healthy exit landscape. “This appears to be improving, driven by enhanced regulatory environment and the presence of promising consolidation opportunities in select sectors. Investors who consolidate positions through M&A that strengthen market presence, expand supply chain capabilities, or leverage technological advancements are better positioned for profitable exits,” Trinh from BDA Partners said.

How 2024 is shaping up for M&As With positive signals in real estate and technology-related merger and acquisition (M&A) deals in the latter part of 2023 and policy changes aimed at attracting foreign investments, the Vietnamese M&A market is expected to recover and thrive in 2024. Explaining more is ASL Law’s managing partner Pham Duy Khuong and senior partner Nguyen Thi Thuy Chung.

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