Vietnamese companies feel much more confident when they engage in merger and acquisition (M&A) business. Their deals are not limited to small scale projects, but regionally and internationally known takeovers.
From big deals
Businesspeople and readers in Vietnam and in the world are actually surprised, even shocked, to know that a Vietnamese businessman named Pham Dinh Nguyen won a bid to purchase Buford Town in the United States. This deal causes a big buzz in the world and brings Vietnamese entrepreneurs to a new high. Nguyen is director of International Distribution Services Company.
Earlier, Hanoi Electronics Corporation (Hanel) acquired 100 percent stake in a company owned by South Korea’s Daewoo Group that manages a 5-star hotel, office and apartment complex on Kim Ma Street, Hanoi City. The deal comes as a surprise as the hotel is rated the most luxury and situated in the best location in Hanoi.
This was not the first time Vietnamese companies took over such a big deal. The first big one is the SRG Group’s purchase of 5-star Hilton Hanoi Opera Hotel from Germany and Austrian owners. The buyer was Nguyen Thi Nga, the owner of SRG and chairwoman of SeAbank.
Another attention-catching big deal was the takeover of 3-star Furama Resort Da Nang by Sovico Group. The domestic conglomerate bought all the stakes of the Bac My An tourism complex, run by the Hong Kong-led joint venture.
In late 2011, another centre of attention was a deal made recently by Thien Minh Tourism Company. It bought the Victoria hotel and resort chain in Vietnam and Cambodia. After the deal, the five resorts and hotels bearing Victoria brand developed by Hong Kong’s EEM Victoria in Vietnam and Cambodia were transferred to Thien Minh Tourism Company. They are Victoria Phan Thiet Beach Resort & Spa, Victoria Sapa Resort & Spa, Victoria Can Tho Resort, Victoria Chau Doc Hotel, Victoria Hoi An Beach Resort & Spa (in Vietnam), and Victoria Angkor Resort & Spa (Cambodia).
Sao Sang Saigon Company, a member company of Nam A Bank, made a purchase of Peninsula property project in District 2, HCM City from JSM Indochina Investment Fund for about US$11 million. CT Group bought into a 36-hole golf course project in Cu Chi district, Ho Chi Minh City from South Korea’s GS Engineering & Construction Company for US$ 24 million. This roughly 200-ha golf course cost US$42.6 million from the South Korean firm and was renamed to C.T Sphinx Golf Club & Residences after the deal.
Earlier, in 2008, the 4-star Amara Saigon Hotel was officially renamed to Ramana Sagon Hotel after Vina Real Estate Development Co., Ltd purchased from a wholly foreign-owned Amara Saigon Hotel Co., Ltd.
Reaching to the sea
Successful M&A deals of Vietnamese businesses are partly resulted from hardships foreign companies facing in developed nations and problems arising from the day-to-day operations. Hard access to capital sources forced many foreign companies to narrow production and business operations. This was evidenced by a sharp decline in foreign investment into Vietnam in the past years. More foreign companies left Vietnam. To a certain extent, this is a good opportunity for domestic capable companies to take over cheap foreign-owned projects.
Actually, domestic companies are very quick to grasp opportunities. As for a big project, apart from its high asset value and prime location, its world-class brand brought the name of Vietnamese businesspeople to the world. This cannot be achieved sooner than buying into it.
Besides, it is not easy to invest a large project because it takes much time and money to find a location, compensate land owners, clear the site and start construction. The clearest evidence for this hardship is the Tan Hoang Minh case. The company was asked to compensate VND40 billion (US$2 million) for a square metre of land and it took it years long to complete. By doing M&A, such nuisances would not happen although initial investment was a little larger. This disadvantage was offset by immediate revenues instead of spending several years building it.
Mr Nguyen Ngoc Bach, Chairman of Asia Invest Group and Director of Vietnam CFO Club, it is quite true that more Vietnamese companies are carrying out M&A cases in the role of buyers. But, this is business is very normal and common on the market, regardless domestic and foreign ones.
Mr Phan Xuan Can, President of Soho Vietnam Soho Property Consultants Joint Stock Company, who has brokered many successful real estate M&As, said that hundreds of projects offered by their owners through Soho now but only some 10 percent of them are noteworthy. This means nice location, completed site clearance, clean legal project profile, clean owner profile, and specially owners’ willingness to sell.
He analysed that projects sold by foreign investors rooted from their difficulties, which forced them to restructure portfolios and seek to sell existing assets. Besides, these foreign investors had stayed in Vietnam for 5- 10 years and they had medium and long-term visions on the market trend. They really want to sell their properties.
For domestic investors, the primary drive is possibly they already share investment foreign investors. Besides, they want to own prime locations where they cannot have in normal time. This is also the chance for them to expand into new business realms. Last but not least, a good property in prime location generates fairly stable source of incomes for the owners.
Si Son
Vietnamese
