Singapore firms eye M&A opportunities in Vietnam

The total value of M&As in the local market was estimated at $2.5 billion during the twelve months from August last year, the highest level in a decade.

The figure for Singaporean investors increased by more than three times compared to last year’s level, which stood at $23 million, and is an all-time high for Singaporean investors here.

According to London-based financial data provider Mergermarket, since August 2007, Singaporean companies have invested around $203 million in the Vietnamese market and carried out more than ten M&A deals.

These M&As were mostly in the chemical and biotechnology industries, while the construction, consumer goods, transport and financial sectors also saw deals.

Most notable was the acquisition of Fortis Healthcare International for a 65 per cent stake in Hoan My Medical Corporation at $64 million in August last year. The company’s name was then changed to Fortis Hoan My Group.

Earlier in 2008, Singapore automotive group Jardine Cycle and Carriage purchased a 12-per-cent stake in Truong Hai Auto for $41 million.

The Vietnamese Government is requiring State-owned enterprises to divest from their non-core business following huge losses by some State firms, and this move is seen as creating opportunities for foreign investors to move into the Vietnamese market.

"Despite recent arrests of several Vietnamese tycoons as part of what appears to be internal power struggles and persistent rumors around the health of the banking system, the long-term growth prospects for Vietnam remain strong, and so investors who make a long-term commitment should do well," Jason Wright, associate managing director for Kroll Advisory Solutions in South East Asia said in a report.

While Singapore firms were increasingly expanding M&As in Vietnam, Japanese investors still dominated with eight deals worth up to $803 million during the last 12 months.

Although French investors carried out only two M&A deals during the period, they topped the table in terms of value, with $1.3 billion in investments. The biggest M&A deal took place in February when ConocoPhillips, the third largest US oil company, sold its assets in Vietnam to French partner Perenco.