Vietnam M&A deal market to touch $20b between 2015-2018

The Vietnamese flag (Image by zdiviv, Freedigitalphotos.net)

The Vietnamese merger and acquisition (M&A) market has witnessed a robust year in 2014, with $4.2 billion in size, which rose 15 per cent over 2013. Most of these the deals involved larger corporations.

The M&A activities are further expected to reach a deal value of $20 billion in 2015-2018 , with engagement from both local and overseas companies, says M&A Vietnam Forum.

This resonates the government’s initiative to equities state-run companies, combined with the rise of the private sector and an increasing flow of foreign capital into Vietnam market.

M&A Forum, which is taking place on August 6 in Ho Chi Minh City on the theme “Anticipating the boom”, plans to further assess the new flows of investment and emerging trends in the areas like retail, real estate and banking.

Banking to accelerate with more big deals

2015 is the final year in the restructuring scheme of Vietnam’s credit institutions. Following the several banking M&As in the first half of the year, several other similar deals are being finalised for second half of the year.

The latest deal in this sector is the merger between Sacombank and Southern Bank. With rising bad debts, Southern Bank’s profits have been sluggish, and the lender could not manage the dividend payouts. The bank’s shareholders are expected to benefit after merger with Sacombank.

Also read: Sacombank, Southern Bank deal marks Vietnam’s third bank merger for 2015

Previously in May, Mekong Housing Development Bank (MHB) was merged into the Bank for Investment and Development of Vietnam (BIDV). BIDV’s strategy is to promote agricultural credit, especially in the Mekong Delta region of the country. By taking over MHB, it will be easier for BIDV to expand its loans to the agriculture sector.

Also read: Mekong Housing Bank confirms merger with BIDV

Another merger was of Vietinbank, the third largest bank by total assets, and Petrolimex Group Commercial Bank. Post merger, VietinBank will be able to tap the financial retail network established through the system of the Vietnam National Petrol Group‘s (Petrolimex) 6,600 petrol station outlets across the country. Petrolimex is a strategic shareholder with a 40 per cent stake in the acquired bank.

In addition, the bank post merger will set up a VND1 trillion financial company, with Vietinbank being the largest investor.

Also read: PGBank, Vietinbank to merge at 1:0.9 share swap ratio

Local banks are also looking to bolster their related operations: finance and insurance. Japan’s Saison Credit acquired a 49 per cent stake in HDFinance from the parent entity HDBank. HD Bank retains 50 per cent stake in the financial firm, which has been renamed HD Saison Finance. The partnership is set to generate a series of new services in the banking and finance industry, including cards and lending.

Also read: VN’s HDBank sells 49% in HDFinance to Japan’s Credit Saison

In another development, Canadian insurer Fairfax Financial Holdings, through its subsidiary Fairfax Asia Limited, plans to purchase 30 per cent in the BIDV Insurance Company (BIC). Securing the strategic investment, BIC hopes to become the leading non-life insurance in terms of distribution network and profitability.

Also read: Vietnam’s insurer BIC to offload 35% to Canadian Fairfax in strategic partnership

High growth in Retail

With over 90 million population and a high growth rate in the retail sector, the country has become a magnet for foreign brands.

Thailand based companies are leading investors in Vietnamese retail, particularly Central Group, which acquired 49 per cent in one of Vietnam’s largest electronic retailers Nguyen Kim, and might take over another player, Pico.

Also readThai Central Group acquires VN’s Nguyen Kim

Central Group acquires second Vietnam-based electronics retailer Pico?

This development has been followed by other mega deals in the second half of 2014. Food firm Kinh Do Corporation has sold 80 per cent of its confectionery business to the US-based sweet treat producer Mondelez International for VND7.85 trillion. Vingroup – country’s leading real estate platform – has aggressively expanded its retail operation by acquiring 70 per cent shares of Ocean Retail, before taking over 100 per cent equity of Vinatexmart, the retail arm of the Vietnam National Textile and Garment Group in April this year and plans to have 100 supermarkets and 1,000 convenience stores by 2017.

Also read: Mondelez acquires 80% in Kinh Do for $370m

Vingroup takes over Vinatexmart, plans aggressive retail expansion across Vietnam

Real Estate takes off with M&A 

The recent deal between Indochina Land, an arm of the real estate investment fund Indochina Capital, and GAW Capital Partners, is an indicator of change for Vietnman’s stagnant property market.

Indochina Land sold four of its 12 projects to the Hong Kong-based fund for $106 million, which was alleged to be lower than the initial investment value by 58 per cent. The projects are Indochina Plaza Hanoi, the Hyatt Regency Danang and two other developing projects in Quang Nam and Ho Chi Minh City. The M&A Vietnam Forum team predicts the latter two are the Montgomerie Links & Estates and Riverside Serviced Apartments.

GAW was established in 2005 with an equity capital of $4.26 billion. The assets under its umbrella stood at $9.16 billion as of the first quarter of 2015.

Also read: Gaw Capital buys Vietnam’s Indochina Land Holdings-2 fund at 58% discount

Another real estate deal involved the transfer of the Celadon project (with an investment of VND24.758 trillion), which has been jointly developed by Sacomreal and multi-sector group Thanh Thanh Cong, to Gamuda Land Vietnam. The total contract value of the transfer has been reported to be over VND1 trillion.

 

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.