The M&A market has cooled down during the Covid period

VCN - Affected by the Covid-19 pandemic, Vietnam's merger and acquisition (M&A) activities have declined sharply from the beginning of the year. However, as an important investment activity of the economy, it is forecasted that after Covid-19, M&A will recover in 2021 and accelerate in the future.
M&A market has cooled down during Covid-19 period M&A market has cooled down during Covid-19 period
Southeast Asian M&As gathering momentum Southeast Asian M&As gathering momentum
VN pharmaceutical market: stiff competition fosters M&A wave VN pharmaceutical market: stiff competition fosters M&A wave
4958-4748-8-1541-12-1506-ma-1024x683
Data on M&A activities from mid-2019 up to now show that real estate, finance - banking, industry, retail, logistics, agriculture, pharmaceutical - health, and construction have been the main sectorsattracting M&A deals. Photo: ST

M&A plunged

In the decline of global investment, M&A activities also witnessed a sharp decline since the beginning of the year.

Accordingly, the total value of global M&A in the first six months of 2020 was US$901.7 billion, 52% lower than the same period last year. Particularly in the Vietnamese market, the total value of M&A deals in 2019 reachedUS$7.2 billion, then by 2020, it is expected that the M&A value will continue to decline, estimated at US$3.5 billion, equal to 48.6% compared to 2019.

Regarding the prospects of M&A in the future, although the data shows the slowdown of the M&A market, with the trend of investment movement, foreign investors' understanding about domestic enterprises now looks likea compressed spring and is the premise for a boom in 2021.

Mr. Do Van Su, Deputy Director of Foreign Investment Department, Ministry of Planning and Investment

In addition to Covid-19, another reason for the decline in M&A this year is that the equitization and divestment process in 2019 and the first nine months of 2020 has continued to be quiet and has not been implemented as planned.

The market is expected to have more large-scale divestments which will help significantly increase the value of M&A in Vietnam.

“Covid- 19 and its new normal status have an impact on M&A activities globally as well as in Vietnam. Investors and enterprises have adjusted their strategy, increased restructuring activities, the need forselling company increases, the detailed appraisal and decisionsare also more difficult,” Mr. Le Trong Minh,Head of The Organizing Committee of Vietnam M&A Forum 2020, said.

Regarding M&A activities involving foreign elements in 2020, Mr. Do Van Su, Deputy Director of Foreign Investment Department, Ministry of Planning and Investment (MPI), said that the number of M&A deals byforeigninvestors into Vietnam fell sharply. Accordingly, the value of M&A deals between foreign investors and domestic enterprises was only 40% of the previous year in value and the number of deals also decreased by 50%.

According to Mr. Do Van Su, the peculiarity of these M&A deals was the inflow of capital from outside the border.However, the restriction of travel among countries had been drastically reduced for nearly 10 months meaninghumans as well as machinerycannot be moved, whichlimits market research and purchasing decisions. Most of the deals made this year were transactions which had alreadyinvestigated.

Data from the Ministry of Planning and Investment also showed that, in the first 10 months of 2020, there were 5,451 instancesof capital contribution and share purchases by foreign investors with a total capital contribution of US$6.1 billion, down 43.5% compared to last year.

In the total number of capital contribution and share purchase instances byforeign investors, there were nearly 1,400 of capital contribution, share purchase which increases the charter capital of the enterprises with the value of capital contribution of nearly US$2.5 billion and 4,059 turns of foreign investorsboughtdomestic shares without increasing charter capital with a value of more than US$3.6 billion.

According to experts, the Covid-19 pandemic with border blockadesin many countries was slowing down M&A activities in Vietnam. However, in the long term, the pandemicwouldmake the market explode with increasing demand from both sellers and buyers. Mr. Do Van Su also emphasized that Vietnam was expected to be the destination of foreign capital flows in the process of investment capital flows, especially in a year when there are a series of big fluctuations happening.

Break out in 2021

Data on M&A activities from mid-2019 up to now shows that real estate, finance - banking, industry, retail, logistics, agriculture, pharmaceutical - health, and construction are the main sectors attracting M&A deals.

In the market, foreign investors are still in the leading position, in which investors mainly come from four countries including: Japan, Korea, Thailand and Singapore. However, a noteworthy point is that the proportion of M&A value in which Vietnamese enterprises play the role of buyer is tending to increase.

According to Ms. Pham Mai Huong, Director of KPMG Vietnam's Financial Advisory and Business Purchasing, in the early months of 2020, the number of customers coming to learn and exchange didnot decrease, especially in the field of infrastructure and real estate. In addition, in the retail segment, the production of essential consumer goods was also receiving attention, the production of raw materials, export products with good export potential was researched by customers.

Regarding M&A in the real estate sector, Ms. Nguyen Thi Van Khanh, Senior Director of Vietnam Capital Market, Jones Lang LaSalle Vietnam (JLL), said that in the consulting process for real estate projectswithbad debt of the bank, JLL noted that foreign investors were very interested in these bad debts.

However, in a number of recent deals, there have been barriers leading to a large gap between the bank as the seller and the investor as the buyer, so the two sides had not met.

According to the representative of JLL, many domestic investors had purchased bad debts and had a high success rate, however, for the bad debt acquisition ascollateral of the banks,it was difficult for foreign investors.

Besides investing in new projects, mergers and acquisitions are and will be an important part of the investment activities of foreign investors in Vietnam.

Commenting on the prospects of M&A in the future, Mr. Do Van Su said that although the data showed the slowdown of the M&A market, with the trend of investment changing, researching domestic enterprises of foreign investors looked like a compressed spring and the premise for a boom in 2021.

To receive the M&A capital flows, the representative of JLL Company said that the big challenge of Vietnam was transparency in corporate governance, the legality of the project, because the reputation of enterprises and the legality of the project were great concerns for foreign investors. "If enterprises can meet those criteria, M&A activities will increase in 2021 and the following years," said Ms. Nguyen Thi Van Khanh.

By Hoai Anh/Ngoc Loan

Related News

Electronics industry overcomes challenges to penetrate deep into global supply chain

Electronics industry overcomes challenges to penetrate deep into global supply chain

VCN - In addition to the opportunities from the investment shift in the electronics industry, Vietnamese enterprises also face many challenges in terms of capital, technology and human resources. Ms. Do Thi Thuy Huong, Executive Committee Member of the Vietnam Electronics Industry Association (VEIA), shared about the future directions for this potential industry.
Continue to handle cross-ownership in banks

Continue to handle cross-ownership in banks

VCN - The situation of excess share ownership, cross-ownership between credit institutions (CIs), CIs and enterprises, although has decreased significantly compared to previous periods, is still complicated and requires continued inspection and control.
"One law amending four laws" on investment to decentralize and ease business challenges

"One law amending four laws" on investment to decentralize and ease business challenges

VCN - According to the Government, the draft Law amending and supplementing certain provisions of the Planning Law, Investment Law, Law on Investment under Public-Private Partnerships (PPP), and Bidding Law (referred to as "One law amending four laws") focuses on amending conflicting regulations that are causing obstacles, to facilitate investment, production, and business activities.
Fiscal policy needs to return to normal state in new period

Fiscal policy needs to return to normal state in new period

VCN - To recover the economy during and after the Covid-19 pandemic, fiscal policy has been flexibly and promptly managed, becoming a solid foundation to help businesses and the economy gradually overcome difficulties. After nearly 5 years, although there are still difficulties, the economy is gradually returning to a high growth trajectory. In that context, it is necessary to let fiscal policy return to normal state.

Latest News

Monetary policy forecast unlikely to loosen further

Monetary policy forecast unlikely to loosen further

It will be difficult for the State Bank of Vietnam (SBV) to further loosen monetary policy due to a rising USD/VNĐ exchange rate pressure, experts said.
World Bank outlines path for Vietnam to reach high income status

World Bank outlines path for Vietnam to reach high income status

The World Bank (WB) has released a report which explores how Vietnam can upgrade its participation in global value chains to become a high-income country by 2045.
Strictly control public debt and ensure national financial security  2025

Strictly control public debt and ensure national financial security 2025

VCN – In order to achieve goal of strictly managing public debt and maintaining security and safety of the national financial system in 2025, it is necessary to ensure the borrowings and repayments of public debts is within the approved estimate; closely monitor public debt indicators to ensure that they are within the ceiling and warning thresholds approved by the National Assembly.
Revising the title of a draft of 1 Law amending seven finance-related laws

Revising the title of a draft of 1 Law amending seven finance-related laws

VCN - On November 19, 2024, the Standing Committee of the National Assembly (SCNA) discussed amendments and refinements to the draft of a law revising seven existing finance-related laws. Concluding the session, Vice Chairman of the National Assembly Nguyen Duc Hai emphasized the need for the Government to direct the drafting body and relevant agencies to collaborate closely to finalize a persuasive and widely supported report, ensuring the quality of the draft law for the National Assembly's consideration and decision.

More News

Transparency evates the standing of listed companies

Transparency evates the standing of listed companies

VCN - According to the Hanoi Stock Exchange (HNX), the number of companies placed under warning, control, or restricted trading on the listed and registered markets has increased over the past two years compared to 2022.
State-owned securities company trails competitors

State-owned securities company trails competitors

Contrary to the outstanding performances in the banking sector, the securities subsidiaries of major banks have yet to fully leverage their potential, despite numerous inherent advantages.
Strengthening the financial “health” of state-owned enterprises

Strengthening the financial “health” of state-owned enterprises

VCN - The state economy plays a key role in the socio-economic development process, but it is necessary to strengthen the financial health and competitiveness of state-owned enterprises (SOEs).
U.S. Treasury continues to affirm Vietnam does not manipulate currency

U.S. Treasury continues to affirm Vietnam does not manipulate currency

VCN - In its latest report, the U.S. Department of the Treasury has positively assessed Vietnam's monetary policy, reaffirming that Vietnam does not engage in currency manipulation.
Exchange rate fluctuations bring huge profits to many banks

Exchange rate fluctuations bring huge profits to many banks

Net profits from the foreign exchange trading segment of many banks have gained positive results thanks to a strong USD/VNĐ exchange rate fluctuations this year.
A “picture” of bank profits in the first nine months of 2024

A “picture” of bank profits in the first nine months of 2024

VCN - Pre-tax profits for banks during the first nine months of 2024 remained positive, exceeding 200 trillion VND, solidifying the sector's position as a market leader.
Many challenges in restructuring public finance

Many challenges in restructuring public finance

VCN - Restructuring public finance is an important step to improve state financial management, ensure resources are allocated reasonably and effectively, contributing to the country's sustainable development. In addition to the achieved results, the process of accelerating public finance restructuring also faces many pressures.
Tax declaration and payment by e-commerce platforms reduces declaration points and compliance costs

Tax declaration and payment by e-commerce platforms reduces declaration points and compliance costs

VCN - E-commerce platforms that declare and pay taxes on behalf of traders not only help to reduce the number of tax declaration points but also reduce the cost of compliance with administrative procedures for the whole society because only one point as the e-commerce trading platform implements tax deduction, payment and declaration on behalf of tens, hundreds of thousands of individuals and business households on the platform.
Disbursement of public investment must be accelerated: Deputy PM

Disbursement of public investment must be accelerated: Deputy PM

Deputy Prime Minister Ho Duc Phoc has called on ministries, agencies, and localities to accelerate the disbursement of public investment from now until the year-end and further tighten investment management.
Read More

Your care

Latest Most read
Monetary policy forecast unlikely to loosen further

Monetary policy forecast unlikely to loosen further

It will be difficult for the State Bank of Vietnam (SBV) to further loosen monetary policy due to a rising USD/VNĐ exchange rate pressure, experts said.
World Bank outlines path for Vietnam to reach high income status

World Bank outlines path for Vietnam to reach high income status

The World Bank (WB) has released a report which explores how Vietnam can upgrade its participation in global value chains to become a high-income country by 2045.
Strictly control public debt and ensure national financial security  2025

Strictly control public debt and ensure national financial security 2025

VCN - According to the plan for borrowing and repaying public debt and foreign debt of the country in 2025, the total borrowing demand of the Government in the year is expected to be at VND 815,238 billion, an increase of 20.6% compared to the Government'
Revising the title of a draft of 1 Law amending seven finance-related laws

Revising the title of a draft of 1 Law amending seven finance-related laws

On November 19, 2024, the Standing Committee of the National Assembly (SCNA) discussed amendments and refinements to the draft of a law revising seven existing finance-related laws.
Transparency evates the standing of listed companies

Transparency evates the standing of listed companies

According to the Hanoi Stock Exchange (HNX), the number of companies placed under warning, control, or restricted trading on the listed and registered markets has increased over the past two years compared to 2022.
Mobile Version