<article>Foreign firms with much higher resources than domestic rivals are dominating the M&amp;A scene in Vietnam, among the world&#8217;s fastest growing economies.</article>

Foreign firms with much higher resources than domestic rivals are dominating the M&amp;A scene in Vietnam, among the world&#8217;s fastest growing economies.
About $3 billion worth of M&amp;A deals have happened in the first half of 2016, according to the annual Vietnam M&amp;A Forum, as firms try to take advantage of relatively cheaper but good quality targets in the country’s fast-growing consumer sector.
The number of reported M&amp;A deals in 2015 was 40 percent higher than the previous year, with total value of $4.3 billion. That eclipsed the previous record of $4.2 billion in 2012.  The financial sector had $1.6 billion in deals, followed by consumer, with $1.2 billion.
Global companies are attracted by the growth rate, which has hit a nine-year high of 6.7 per cent, and by the large market of 90 million people, mostly aged under 35. Consumer spending is forecast to grow nearly 50 per cent from 2015-19, to $184.9 billion, according to Euromonitor International.
Vietnamese firms have struggled to ink M&amp;A deals, because they lose out to foreign competitors when it comes to funding. Only a few have the necessary financial heft, or have managed to raise enough debt, to acquire rivals or other firms in their respective industries.
For companies based in Thailand and Japan, deals such as the Trans-Pacific Partnership and ASEAN Economic Community (AEC) have made it easier to acquire Vietnamese firms. “I have seen a lot of competition between Thai and Japanese companies for the same targets in Vietnam,” said Masataka Yoshida, managing director at Tokyo-based M&amp;A service firm <a style="color: #000080;" href="http://www.recof.co.jp/english/">Recof Corporation</a>, at a meeting of the Vietnam M&amp;A Forum on Monday. &#8220;With the establishment of the AEC, ASEAN as a whole is becoming a key part of the world that is very appealing to global investors, creating a competition between nations in the region in attracting foreign direct investment and M&amp;A.&#8221;
Companies in Thailand and Japan are both eager to grow outside their home markets, which have witnessed low growth and have mature markets, in contrast to Vietnam&#8217;s soaring rate.
Vietnam&#8217;s politicians also revised the nation&#8217;s laws covering M&amp;As, to make the process quicker and more transparent. A new law enacted in July has cut the time to acquire an investment license to just 15 days, a reduction of about two-thirds of the earlier duration. A month earlier, the government said that foreigners can now buy majority stakes in certain kinds of listed companies.
Vietnam has also specified 18 industries including consumer, property, transport, construction and manufacturing, where foreign investment is allowed. Taken together, these measures have laid out a clearer path for companies interested in M&amp;A.
Thai companies have acted more swiftly than their Japanese counterparts in striking M&amp;A deals. Yoshida said that the reason was slower decision making process in Japan.
Thai companies <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=central+group">Central Group</a> and <a href="http://www.dealstreetasia.com/?s=tcc+holding">TCC Holding</a> expanded their presence in Vietnam&#8217;s retail market with the acquisitions of <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=big+c+vietnam">Big C Vietnam</a>, and the Vietnam operations of fashion e-commerce platform <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=zalora">Zalora</a> and <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=metro+cash+carry">Metro Cash&amp;Carry</a>. Another big-ticket deal that involves a Thai corporate buyer is the $1.1 billion transaction to buy majority stake in <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=masan+group">Masan Group</a>&#8216;s subsidiaries.
Meanwhile, Japanese investors have been active in various sectors, including <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=ana+holdings">ANA Holdings</a>&#8216; strategic investment in <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=vietnam+airlines">Vietnam Airlines</a>, Taisho’s acquisition of over 24 per cent in DHG Pharma, JX Nippon Oil &amp; Energy&#8217;s 8 per cent <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=nippon+petrolimex">shareholding in Petrolimex</a> — the country&#8217;s largest distributor of petroleum products — and <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=aeon">AEON</a>&#8216;s purchase of two local retailers.
The total FDI into ASEAN countries in 2014 hit $136.2 billion, and Vietnam was the best performer among emerging territories in receiving inbound investment, according to the United Nations Conference on Trade and Development.
Vietnam’s deputy finance minister Dang Huy Dong said the finance ministry was working to help boost the market for local products. He added that the main reason for less significant M&amp;A activity of Vietnamese companies was that they did not bring as much value to local firms as foreign companies and investors did.
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Vietnam: Foreign investors are grabbing more deals, edging out local competition

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