M&A DEALS SURPASS US$3 BILLION IN FIRST SEVEN MONTHS

M&A activity is projected to bring US$6 billion this year owing to a number of major deals in sectors important to the local economy.

Le Trong Minh, editor-in-chief of Dau Tu newspaper, told the event that M&A has emerged as an effective vehicle to mobilize capital for the economy over the past decade. It has helped diversify capital mobilization in Vietnam and boost economic restructuring and the equitization of State-owned enterprises.

In addition, corporate governance at many local enterprises has improved thanks to M&A deals, Minh stressed.

Organizers of the Vietnam M&A Forum forecast that M&A deals would boom in 2016-2017, especially those between domestic and foreign firms in the sectors of retail, consumer goods, manufacturing, real estate and agriculture.

A research group of the Vietnam M&A Forum pointed out more foreign firms have sought M&A deals to enter Vietnam to capitalize on its speedier international integration, its joining the ASEAN Economic Community, and its signing new free trade agreements (FTAs) including the Trans-Pacific Partnership.    

Therefore, investing in Vietnam means foreign companies can gain access to an ASEAN market with over 600 million consumers, a young labor force and an expanding middle class.

Major State-owned enterprises’ capital divestments are creating opportunities for both domestic and foreign investors.

Statistics showed more than 60% of M&A deals this year have been a matter of domestic enterprises but their value have averaged around US$5 million each. Meanwhile, the acquisitions involving foreign investors range from US$30 million to US$100 million and there is a deal worth more than US$1 billion.

Deputy Minister of Planning and Investment Dang Huy Dong said Vietnam M&A Forum 2016, which is organized by Dau Tu newspaper and AVM Vietnam and endorsed by the ministry, is an annual high-profile event in Vietnam.

Dong said leaders of Government agencies and enterprises and investors at previous events discussed conditions, evaluated M&A trends, shared experience and found investment opportunities in many sectors. M&A deals abound in the sectors of retail sales, consumer goods and real estate.

He noted that the Vietnam M&A Forum 2016 will take place in the backdrop of Vietnam’s deeper international integration that is bringing both opportunities and challenges. 

Vietnam’s new leadership has issued policies to support firms and step up administrative reform.

Given Vietnam’s signing of new FTAs, local and foreign investors can explore business opportunities in bigger markets. 

However, Dong said Vietnam is facing many problems like low labor productivity, weak competitiveness, low efficiency of the economy and natural calamities.

In the first half, the macro economy stabilized, inflation was under control and foreign direct investment (FDI) approvals rose strongly. However, gross domestic product (GDP) growth stood at 5.52%, far below 6.47% in the same period last year.

The agro-aqua-forestry and mining sectors fell while the risk of a return to high inflation stayed high and export growth was lower than expected.  

Therefore, the Government, local authorities and businesses are struggling to mobilize resources for socio-economic development, tap into opportunities from FTAs and restructure the economy to pursue fast yet sustainable growth.  

Dong said greater effort should be made to remove hindrances to M&A activity so that it will become a major channel to raise capital and help speed up the restructuring of the economy as well as companies.

The Vietnam M&A Forum 2016 will be organized in HCMC on August 18 with the participation of 500 enterprises and domestic and international investment funds that account for 85% of total M&A value in Vietnam.

The event will comprise a conference, an MAF Expo investment connectivity program, a ceremony to honor outstanding M&A deals and consulting firms in 2015-2016, and a training course on M&A strategies.

Source: The Saigon Times