From the end of 2016 to the present, the market has begun to slowdown when there have been few big and quality trade affairs announced.
The total M&A value of Viet Nam in 2016 reached a record level of US$5.8 billion, highest ever before and grew 11.92% compared to 2015, IMAA specified.
The M&A highlights of Viet Nam in 2016 resulted from the big trade affairs in retail sector such as Thailand company’s acquisition of Big C and Metro and divestments of state capital, typically SCIC’s continuous capital divestment in Vinamilk to F&N.
However, the big trade affairs were mainly conducted in the first half of 2016.
According to M&A experts’ assessment from the IMAA, there are many challenges to Vietnam’s M&A growth in 2017. Challenges may include: competition in attracting foreign capital flows to countries in the region, obstacles from equitization in Vietnam, business quality and size of the economy.
IMAA forecasts that in 2017, without the big pushes, the M&A value will not easily outpace the target of US$5.8 billion of 2016. This requires a big boost from enterprises and government to take advantage of foreign capital flow.
To achieve M&A value at least as one in 2016, it is strongly requested the State to divest in large groups and corporations. Based on the Government and investors’ assessments, the process of equitization and divestment in 2016 and the first six months of 2017 is slow. At the same time, the market requires a new boost and big pushes.
According to IMAA, in consideration of market scale, the growth of M&A market in Viet Nam is remarkable; the market scale is, however, medium among Southeast Asia’s market.
Particularly, total value of M&A of Singapore’s market in 2016 reached US$62.3 billion, much higher than those from US$11 – US$16 billion of Indonesia, Thailand and Malaysia. The Viet Nam’s market scale is 86.22% as big as that of Philippines, the country which has the total value of M&A in 2016 reached US$6.75 billion.
In consideration of scale of trade affairs, in Viet Nam’s market there are mainly small trade affairs valued US$3 - US$4 million (equivalent to VND60 - 80 billion), the small ones account for 64.16% in terms of value and over 90% in terms of numbers.
The foreign investors continue to play a key role in large-scaled trade affairs valued from US$20 to over US$100 million. In the past few years, there have been acquisitions of big companies and systems valued over US$1 billion in Viet Nam’s Market. In consideration of M&A trade affairs based on sector, value of retail sector and consumer industry, real estate continues to account for a large proportion of M&A value in Viet Nam. This is also the sector attracting the attention of both foreign and local potential investors.
However, the numbers of trade affairs are mainly in sectors: industry, materials and consumer production. These account for 53% of M&A trade affairs in Viet Nam.
Based on the numbers of countries making investment, the critical factors promoting M&A activity in Viet Nam in the past few years is the wave in accession to the market of the regional countries, typically Thai Lan, Singapore, Japan, Korea, which are the main purchasers in Viet Nam’s Market.
While Japan is making strategic investment in aerospace, petroleum and pharmaceutical companies, Singapore emerged with real estate trade affairs and Thailand continues to focus on retail and material - chemical sectors with the purpose of expanding its market. Korea conducted some of trade affairs in terms of food and finance - banking.
