M&A heats up amid the pandemic

Despite the outbreak of Covid-19, the M&A deals of Vietnamese enterprises M&A deals closely follow Japanese and Korean investors.

The epidemic has brought many difficulties, but Japanese and Korean companies are still actively carrying out mergers and acquisitions deals in Vietnam, in addition to the substantial rise of the domestic sector. The above information was shared by Mr. Warrick Cleine, President and General Director of KPMG Vietnam and Cambodia, at the Vietnam M&A Forum 2021 organized by Investment Newspaper on December 9.

In the first ten months of this year, domestic investors made 133 mergers and acquisitions transactions, while foreign investors from Japan and South Korea completed 30 and 19 transactions, respectively. Domestic companies accounted for 1.61 billion USD of the deal’s total value and only 68 million USD compared to Japan’s 1.67 billion USD.

Excluding the deal that Sumitomo Mitsui Financial Group bought a 49% stake in FE Credit worth $1.3 billion, Vietnamese companies are on par with Japanese and Korean investors in terms of price deal value.

Vietnamese businesses are closely following foreign investors in the merger and acquisition market is because the impact of the Covid-19 pandemic has made the presence of international companies less. Taking advantage of the gap left by foreign investors due to the closure of international routes, domestic investors seize this opportunity to expand their M&A market share, penetrate new industries, and form strategic relationships simultaneously.

Vingroup, Masan, Hoa Phat, Vinamilk, Novaland are currently the five domestic units with the most significant M&A activities in the market, both in terms of value and number of consecutive transactions in the past two years.

Representative of one of the Vietnamese enterprises with extensive M&A activities in recent years, Mr. Nguyen Thai Phien, Deputy General Director of Novaland, said, M&A is essential at the stage of promoting the development strategy of projects megacity.

According to Mr. Phien, usually, only 10-20% of the land fund for enterprise project development can be proactive, while 80% of the land fund comes from mergers and acquisitions. On the other hand, creating mega-urban projects requires providing many different services, and investors need multi-industry M&A activities to complete this ecosystem.

On the other hand, one of the biggest reasons motivating Japanese companies to act is the limited long-term growth room in the Japanese market and the fear of being left behind by major competitors in the Japanese market. Western or other Asian competitors.

According to KPMG Korea, Korean investors still consider Vietnam one of the most attractive markets thanks to its prospects and stable economic growth. Large corporations such as Samsung, LG, Hyosung, and Hyundai Motors have established their production sites or subsidiaries in the northern region of Vietnam. In the southern part, sectors attracting attention from Korean investors include e-commerce, financial technology, and logistics.

The interest of Korean investors in the Vietnamese market has been recorded in e-commerce and financial technology based on Vietnam’s long-term stable economic outlook, and the number of internet users and smartphones is on the rise. Besides, Korean investors still pay much attention to finance, auto, retail and manufacturing, auto insurance, construction, and real estate.

Mr. Warrick Cleine forecasted that, in addition to a strong wave of mergers and acquisitions from foreign investors, Vietnamese enterprises would continue to play an essential role in M&A activities in the coming time when more and more large corporations appear to be more diverse professions than before.

(Source: VnExpress)