Enterprises pursue M&A and divestment deals to alleviate cash crunch

Prominent entities such as Development Investment Construction JSC, Vinaconex, Phat Dat Real Estate Development JSC, Hoa Binh Construction Group JSC, Nam Long Investment Corporation and VRC Real Estate and Investment JSC, among others, have strategically pested from subsidiaries, affiliates and liquidated assets to stabilise their cash flows.

Hoa Binh Construction successfully offloaded its total stake in the subsidiary, Hoa Binh Construction - Design Consultancy Co., Ltd. It also fully pested its holdings of 32.31% and 47.82% in its affiliates, Anh Viet Mechanical and Aluminum Glass Corporation and Jesco Hoa Binh, respectively.

Nam Long Investment recently finalised the transfer of a 25% stake in the Nam Long Dai Phuoc project (pning 45 hectares) to partner Nishi Nippon in June, generating nearly 200 billion VND (9.4 million USD) in profit after tax.

Similarly, VRC Real Estate effectively transferred a segment of the ADC residential area in Phu My ward, HCM City.

Phat Dat Real Estate said that the complete sale of its 49% stake in BIDICI Real Estate Investment JSC is nearly wrapped up, presenting the company with an opportunity to accrue over 1.4 trillion VND to stabilise its capital flow.

Vinaconex completed pesting its stake, which worth nearly 199 billion VND, in the Van Ninh International Port. Hai An Transport & Stevedoring JSC plans to exit Luu Nguyen Cai Mep Port Services JSC (51.54% stake, 124 billion VND).

Other firms like Trung Nam Group, Sam Holdings and Vietnam Airlines are pesting from subsidiaries.

SGI Capital emphasises that pestment strategies and asset sales are key for large enterprises to focus on core business areas and sustain profit growth.

On the other hand, over recent months, the real estate and construction sectors have witnessed a flurry of M&A transactions.

In real estate, M&A is crucial for firms facing a cash crunch. Deals focus on projects with legal clarity and growth potential, expected to escalate in the year's end. Industrial real estate is set to attract foreign direct investment (FDI) from significant M&A transactions.

Despite passing the peak of liquidity challenges, ongoing market pressures will hinder businesses from capitalising on low interest rates.

In late 2024, companies in need of debt restructuring must navigate liquidity risks and consider increased pestments and M&A to maintain stock prices and retain major shareholders.

In addition, experts highlight that real estate M&A now is more than just asset accumulation, it has become a strategic move to enhance businesses' market competitiveness.

The focus has shifted from initial competition and confrontation to investment and collaboration, aiming to create shared value for progressive development.

The second quarter APIQ report by Savills showed significant M&A transactions in the real estate domain, Kim Oanh Group (Vietnam) joined forces with NTT Urban Development, Sumitomo Forestry and Kumagai Gumi Co Ltd (Japan) to develop The One World, a sprawling 50-hectare residential complex in Binh Duong province.

Another noteworthy deal involved Nishi Nippon Railroad (Japan) acquiring a 25% stake in the 45.5-hectare Paragon Dai Phuoc project from Nam Long Investment (Vietnam) for around 26 million USD.

In the realm of industrial real estate, Tripod Technology Corporation recently finalised the acquisition of an expansive 18-hectare industrial land parcel in Ba Ria-Vung Tau province from Sonadezi Chau Duc.

Nguyen Van Dinh, deputy chairman of the Vietnam Real Estate Association, said that the M&A approach swiftly introduces real estate products to the market, alleviating supply shortages and aligning with the Government's call to lower housing prices.

Experts anticipate a surge in real estate M&A activities in the latter part of this year. These transactions will be propelled by both domestic and international enterprises.

Beyond industrial and residential real estate sectors, commercial office spaces and tourism properties are garnering significant investor attention./.