Identifying the "hot" industry in the M&A market

	The M&A market has cooled down during the Covid period
	M&A market has cooled down during Covid-19 period
	The M&A market after Covid-19: Welcome investment wave with caution

Renewable energy - one of the industries that is attracting the attention of investors in the M&A market. Photo: Nguyen Thanh

Trends change

Technology is an area that is receiving a lot of attention from investors when in the 10 months of 2021, the technology-related M&A market recorded a remarkable increase in both value and quantity. The number of deals doubled while the total value increased more than three times compared to the whole of 2020, reaching nearly US$1 billion, even exceeding the level before the pandemic. The main driving force comes from the need to invest in technology infrastructure as well as to meet the need to use alternative online services in the context of the ongoing pandemic.

In addition, the renewable energy sector has attracted many investors. The development orientation of the Government with renewable energy in recent years has created many opportunities for domestic and foreign investors. Typically, BCG Energy of Bamboo Capital is a very active name in the market in attracting capital from investors.

Thuong Pham, Deputy General Director and Chief Financial Officer of BCG Energy, said that BCG has a renewable energy segment and attracts investors' capital, and the company also enjoys the Government's support in the renewable energy sector. In fact, this business has had many successful deals in attracting foreign investors. In which, the highlight is the successful capital raising deal of US$43.6 million, equivalent to more than VND1,018 billion, from Leader Energy in the form of convertible bonds to invest in BCG's renewable energy segment.

Meanwhile, Vo Ha Duyen, President of VILAF Law Firm, also said that M&A in the finance-banking, technology, and consumer industries will explode in the near future. Besides, the infrastructure sector is also one of the industries that foreign investors are interested in and M&A will increase, but this field requires large capital.

Regarding the wave of M&A in the pharmaceutical industry, in addition to the big deals mentioned earlier at Imexpharm Pharmaceutical Joint Stock Company, Ha Tay Pharmaceutical, Pymepharco Joint Stock Company, in 2020, the group of investors represented by GIC poured US$203 million into Vinmec, while VinaCapital invested in Thu Cuc Hospital. Japan's Sumitomo Corporation announced it would invest tens of millions of dollars in Insmart – an enterprise specializing in providing insurance and healthcare-related services in the Vietnamese market.

In addition, the dental clinic segment will continue to attract investors with established chains with high-quality facilities and well-trained dentists. In early 2021, Kim Dental successfully raised US$24 million in Series B round from ABC World Asia Investment Fund.

Traditional channels lead the market

However, according to Le Khanh Lam, President of RSM Vietnam, FDI enterprises will have high confidence in the Vietnamese market in the coming years. But before making a decision on a big deal, investors also need to see a lot of other information. Traditional fields such as banking, real estate, and consumption have always been attractive to investors.

In fact, M&A in the financial - banking sector was active in 2021, with the record being that VPBank sold 49% of FE Credit's capital to a Japanese partner, earning nearly US$1.4 billion. Specifically, at the end of October 2021, VPBank officially completed the sale of 49% of FE Credit's capital to a partner SMBC (Japan). This is the highest value M&A deal ever in the finance - banking sector and also the largest M&A deal in Vietnam in 2021.

Previously, at the end of November 2021, MSB signed an agreement to sell 100% of its subsidiary FCCom capital to a foreign partner. The deal is expected to be signed by the end of this year and will bring the bank VND1,800 - 2,000 billion in profit, recorded next year. This is more than four times the valuation that some analysts previously forecast.

The market is expected to be even more active, with a series of billion-dollar M&A deals appearing. If in 2021, the M&A market of consumer finance companies makes waves, it is estimated that in 2022, the market will witness a series of deals to sell bank shares to foreign partners. In which, the most notable is VPBank's deal to sell 15% of the parent bank's shares, which is expected to take place in the first quarter of 2022. In addition, with weak and especially controlled banks, according to M&A experts, it is also an opportunity for domestic and foreign investors when the trend of mergers and acquisitions is vibrant.

Dr. Vo Tri Thanh, an economic expert, said that despite the impact of Covid-19, the success of a series of M&A deals in the financial - banking sector proves that foreign investors highly appreciate the growth potential of Vietnam in general as well as the banking sector in particular.

Sharing the same view, Pham Van Thinh, General Director of Deloitte Vietnam, said that when the pandemic is under control, the banking M&A market in Vietnam will be active again. Although Vietnamese banks' bad debts are at risk of increasing due to the impact of Covid-19, Thinh said that thanks to the business results of most Vietnamese banks, which are very optimistic and the market space is still large, so Vietnamese banks are still attracting international investors, especially in areas such as consumer and retail banking.