M&AS Set To Increase in 2012
According to the Nexus Research Group, Vietnam saw increasing numbers of M&As, chiefly in real estate, finance, information technology and consumer goods production. In the first nine month of last year, M&A were valued at US$2.67 billion, a 150 percent increase compared to the previous year. The consumer goods sector led with more than one billion in M&A value, accounting for 38.6 percent of total M&As last year; with the financial sector following with US$453.4 million, equivalent to 16.9 percent. Foreign buyers accounted for around 81.3 percent of all M&A deals, while domestic buyers made up 18.7 percent of the total. By a rough reckoning, M&A deals increased around 34 percent annually in value in the past few years.
"We saw a host of M&A deals last year due to various reasons including withdrawals of investment capital from some domestic and foreign funds. However, some foreign investors emerged and seemed to be much interested in M&A deals in Vietnam, such as China’s C.P. Pokphand (CPP) that acquired 70.8 percent of C.P. Vietnam Livestock Corporation, Russia’s VimpelCom that acquired a 49 percent stake in GTEL Mobile JSC, and International Finance Corporation (IFC) that has acquired 10 percent of the Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank). M&A deals have tended to increase in 2012, especially among banks and real estate and production companies," said Aureos Capital Vietnam Director Dang Doan Kien.
Viasa Fund Chairman Alan Phan agreed, adding that M&A deals would be seen in more sectors this year, especially in real estate, information technology and securities. Foreign buyers would have more chances to buy Vietnamese companies at relatively cheap prices.
M&A deals will help holding companies grow more rapidly as they immediately acquire new brand, technology and markets. Additionally, Vietnam’s economic reforms will open new opportunities for M&As and this trend will continue growing this year.
Last year also saw major M&A deals among some corporations and groups in Vietnam. Technology group FPT hiked its chartered capital to more than VND2.1 trillion after issuing almost an additional 20 million shares. The shares will replace stocks from existing shareholders of its three affiliates- the FPT Trading Group (FTG), FPT Software Joint Stock Company (FPT Software) and FPT Information System Joint Stock Company (FIS). Through the stock swapping, FPT will control 100 per cent of these affiliates’ total chartered capital. Currently, FPT owns 92.26 per cent of FIS’ chartered capital, 66.07 per cent of FPT Software’s and 91.79 per cent of FPT Trading. The rate of swapping will be based on appraising FPT share values and that of these three affiliates.
Vinpearl Corp issued 25.6 million shares to swap for the shares of three associated companies, namely Vinpearl Da Nang, Vinpearl Hoi An and Vincharm. The market witnessed the biggest M&A deal in the fourth quarter of 2011, with the merger of Vincom and Vinpearl, which is considered a typical horizontal merger deal between two Vietnamese companies, aiming to expand their scale of business and diversify business fields.
Speaking about the M&A trends in Vietnam this year, Dang Doan Kien said,"Vietnam’s economic development is viewed as promising according to foreign investor forecasts. Foreign direct investment (FDI) has recovered in February after shrinking in January, with confirmations from Japanese, South Korean and Indian investors. Meanwhile, difficulties with domestic securities and real estate markets, and equitization of state enterprises will favor further M&A deals."
