General

Vietnam M&A to gain size and trust from foreign investors in 2020

Trường Lăng

February 12, 2020

Vietnam acquisition and merger (M&A) market is bound to take a growing place in Vietnam economy in 2020, up to the importance of traditional segments such as real estate, industrial production and construction materials.

State of M&A in Vietnam

Margin of M&A activities in Vietnam over the years has spread across many fields, though real estate and finance activities remain the bulk of it. In the past years, the value of M&A deals in Vietnam reached USD 6.4 billion, including 42% for real estate deals. Partners from Korea and Singapore account for two-thirds of all deals.

Vietnam becomes more attractive both in terms of opportunities and regulation for M&A

Vietnam continues to be an attractive destination for investors seeking high growth, as Vietnam converges very attractive factors such as GDP is forecast to fain the stable growth for the next 5 years, a country with the third largest population in Southeast Asia with a young, dynamic population and high consumption spending. In addition, the improvement of domestic investment and business environment also creates an attraction for Vietnam market.
Another attractive point for foreign investors is that, although the process of equitisation and divestment in state-owned enterprises has been behind schedule in the past few years, the Government Vietnam is speeding up this process, bringing great opportunities for foreign investors.

What to expect in 2020?

Vietnam M&A market in 2020 will continue to be mostly represented by foreign investors, with big players from Singapore, South Korea, Japan and Thailand. However, in 2020, domestic investors should become more and more prominent and more active in the battle fighting for market share.
In terms of M&A attraction, real estate will continue to be a big magnet for investors. In addition, other industries and fields such as industrial production, services, construction and construction materials are also major attraction of M&A activities in 2020 thanks to the relocation of production from abroad into Vietnam to take advantage of free trade agreements signed by Vietnam and to “avoid” the US-China trade war..
The increasing domestic demand due to the rapid population growth and rapid urbanization also has significantly impacted on the attraction of M&A activities in the field of services and consumer goods.

Gaining trust from foreign investors –Singapore experience

The M&A wave of Singaporean businesses in Vietnam will increase in the coming time as Singapore people always look for investments with a very simple reason: Singapore is a small island, based on capital – the capital here is not only cash in hand, but also capital mobilization and financing. Singapore businesses tend to look for investment and the regional markets are always the prior destination. Meanwhile, Vietnam’s domestic market is larger than Singapore.
The trend of Singapore real estate businesses entering into Vietnam market will continue to increase, but this is only one of the sectors that suit the taste of Singapore businesses, in fact, a number of retail businesses have increased the penetration into the Vietnamese market in the context that the demand of many consumers is higher and the demand for good quality goods has increased.
“Fintech is expected to occupy the large wave in Vietnam M&A market in the near future, especially the investment source from Singapore. Finishing the legal framework for Fintech will facilitate M&A activities in this area. Currently, Fintech businesses began to contribute to the Vietnamese economy, ” Chor said.
Suggestions on successful M&A model for foreign enterprises entering Vietnam market, Mr. Chor said that there will be many successful models, that depends on M&A of each industry and field. “However, with more than 20 years of experience and observation, the form of joint venture may be the model that can ensure the most success,” Mr Chor concluded.

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