New Wave of M&As in Vietnam

10:25:28 AM | 8/14/2014

Economic experts have recognised that in the period 2008 and 2013, Vietnam witnessed the very first wave of mergers and acquisitions (M&A) with the basis of the volatility of the stock market, the efforts of businesses to restructure and overcome the crisis. During this period, the number of M&As in Vietnam grew by 5 times; accordingly, many investors and businesses took advantage of the opportunities and appropriate M&A strategies to become more powerful corporations.
Trends in M&A
Along with the increasingly powerful trend of M&A, the year of 2014 will be a pivotal year for the second wave of M&A. According to the report of the AVM Vietnam, in the period of 2014 and 2018, the total value of M&A transactions in Vietnam is estimated up to US$20 billion.
The Grant Thornton International Corporation recently announced the International Business Report (IBR). This includes an emphasis on an increasing number of M&A activities since last year when many surveyed businesses who tapped into the M&A opportunities develop quickly. Most growing enterprises in the world see M&A as an important means to supplement and promote positively for the current business activities of enterprises.
According to reports, there are about 31 percent of businesses that expected to have growth through M&A activities in the next three years, up from 28 percent over 2012. However, the growth rate of the dynamics enterprises is increased by 55 percent and this trend is growing in all regions of the world.
Mike Hughes, Head of the M&A Advisory Board of the Grant Thornton, said that the global forecasts of the M&A growth is a sign for the more stable and significant recovery of the economy and the focus of the business is shifting from survival to maintenance of a growth action plan.
The representative of the Grant Thornton group emphasizes the fact that Vietnam will witness the second wave M&A and the wave of the IPO of the large-sized state enterprises; the M&A strategy will contribute to the growth of the enterprises in Vietnam.
"The real business is investing time and money in the search for M&A transactions, rather than just talking to ambitious acquisitions in the future, which is really a great sign for a stronger growth of the market,” said Mike Hughes.
Factors to promote M&A
Vietnam's market is preparing for a new wave of investment after participating in the ASEAN and the TPP. Moreover, the equitisation and divestment of the state capital will be the biggest motivation for the M&A activity in the second wave. It is forecast that there will be largest number of M&A transactions in some areas of banking, consumption manufacturing, real estate, information technology, transportation and logistics.
The process of equitisation of 432 enterprises will be completed by the end of 2015, along with the requirement of finding a strategic partner who will help investors and businesses to take advantage of the M&A opportunity and apply appropriate strategies to become stronger.
In Vietnam, there will be an increasing number of M&A investors with strong potential, typically as Masan, Kinh Do, Vinamilk, and Viettel. During this period, there are some major deals with strategic partners who come from ASEAN and Japan such as Mizuho, Mitsubishi Bank, SCG, and Fortis.
The second M&A wave has launched a second powerful way to create a more resilient business system of finance and management that contribute more value to society. An oriented wave of investment, if standardized, will be one of the important premise to get Vietnam's economy out of the middle low income trap, and become to be the developed economy in the world.
Huong Giang