1. How do you judge the M&A trends in Vietnam at the current time?
The M&A market in Vietnam since the beginning of this year
is very active. Foreign investors tend to invest in public listed
companies or companies with good brand in the market. Sectors that
attract the most interest of foreign investors are finance, real
estate, retail, consumer goods, etc.
The reason is that the investors are very optimistic about the
development of Vietnam's market. In addition, the Government
has also made several successful attempts to improve the investment
environment, including the consideration for the amendment of the
Law on Securities, which is believed to bring better financial
sources to the country.
2. What should foreign investors benefit from the trends and what should they be aware of?
The Government's privatization of many state-owned enterprises this year together with the fact that many enterprises with large capitalization and of great interest to foreign investors in these sectors are now preparing for the public listing give foreign investors more investment choices. However, they should conduct a full due diligence on the target to make sure that their investment is secured and in compliance with Vietnam laws.
3. What are still the shortcomings of the M&A deals in Vietnam?
Transparency is a barrier to foreign investors. The local target companies do not adopt international accounting standards or the equivalent, or are not willing to disclose sensitive information to their potential partners. In certain cases, for example, in real estate development projects, under table expenses are of great concern to foreign investors, especially those from the US, EU, UK, Japan and Korea.
4. Many people keep worry of the loss for not only local brands but also the local culture with more foreign domination after the M&A. What are your opinions about the matter?
It should not be of great concern. Foreign investors when buying in local companies/ brands usually bring technology, high-quality management standards and capital, which local companies lack. This helps the local companies/ brands better compete in the market, especially in case of Vietnam's deep integration into the world and regional economy. Moreover, culture is something that foreign investors have to adapt to be able to survive in Vietnam. The case of Grab and Uber is an example.
5. What is the forecast of the trend in the future? And how they
will drive the market?
Leading enterprises with good financial capacity and high growth
in the sectors will attract both foreign and domestic investment.
It is noted that in 2018, there will be a number of state-owned
enterprises privatized under the Prime Minister's decision.
These enterprises include Habeco, Vinamilk, etc. which is believed
to be successfully privatized following the recent success of
Sabeco, another state-owned enterprise in the beverage sector under
the Ministry of Industry and Trade's management.
In terms of capital sources, we can expect a cash flow coming from
major Asian economies such as Japan, Korea, Singapore, Hong Kong
and especially mainland China which increases their strong presence
in the market.
We strongly believe that the equitisation of SOEs of a larger scale
and with a strong determination from the top would play a key role
in driving the market.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.