Expecting cross-border M&A deals

Many real estate M&A deals are expected to explode in 2025. Source: Internet.

Foreign capital is rushing back to Vietnam

Nearly 500 experts, businessmen, investors... attending the Vietnam Mergers and Acquisitions Forum 2024 (M&A Vietnam Forum 2024) organized by Dau Tu newspaper recently shared experiences and strategies, ready to welcome large investment deals and expected to strongly attract foreign capital in 2025.

Mr. Dinh The Anh, Executive Member, Head of Corporate Finance Consulting, KPMG Vietnam, said that in the past 2 years, the M&A market has declined. However, after the decline, there are signs that the market is returning, with buyers recording an increase in quantity, and foreign capital flows are returning to Vietnam.

“The market will witness more excitement in the coming time and there will be a few deals about to be completed. In particular, Korean and Japanese investors who have been quite quiet in the past 2 years are now returning. In particular, Korean investors who have businesses or activities in Vietnam are having confidence in the Vietnamese market,” Mr. Dinh The Anh shared.

Experts say that both investors and sellers are increasingly interested in business activities after closing the deal. Rapid changes in the market and changes within the business can make the business no longer suitable for the situation after the deal is completed. Moreover, the process of business planning and the value of the resonance between the two businesses after the M&A deal faces many challenges due to uncertainty and fluctuations in long-term demand trends.

As the third largest unit in the market in the field of renewable energy, Mr. Pham Minh Tuan, Vice Chairman of BCG Group, said that foreign investors in the energy sector when they first come to Vietnam are quite hesitant, because they do not understand Vietnamese businesses and culture. However, after a period of research, they feel more secure and have invested in renewable energy projects.

Currently, in this field, many investors expect a number of new investment policies. BCG is holding renewable energy projects with a capacity of 700 MKW. Recently, BCG also implemented a waste treatment project in Ho Chi Minh City. For renewable energy projects alone, BCG has invested VND20,000 billion and aims to have more renewable energy projects by 2027.

“BCG is expecting the Government to have policies to encourage investors in implementing renewable energy projects, in order to enhance the position of businesses to attract foreign investors. Therefore, BCG is very interested in attracting foreign capital in implementing projects in this field,” said Mr. Pham Minh Tuan.

Although M&A transactions in 2024 will be cautious under many challenges, the fundamental factors for long-term growth still exist in Vietnam. Therefore, the Vietnamese M&A market in the late 2024 and 2025 will be increasingly promising for investors looking for opportunities amid regional fluctuations. However, in order for the Vietnamese M&A market to grow stronger and become a destination for global capital flows, in the current context, the driving force of cross-border deals is still needed. Experts expect that investors from Japan, South Korea, Singapore and the US, which have been leading M&A activities in Vietnam, will return from 2025.

Vietnam's M&A market stands out

In addition to the driving force from foreign capital flows, domestic investors have made active contributions to the M&A market. According to data from KPMG Vietnam, domestic investors play a major role in the Vietnamese M&A market, accounting for 53% of the total transaction value announced in the first 9 months of 2024. This figure is nearly double the total contribution value of the 4 largest foreign investors combined. KPMG believes that this is the result of the business restructuring process of domestic enterprises. This trend also shows that foreign investors are approaching the M&A market in Vietnam more cautiously.

In early 2024, Coteccons completed the transaction procedures to acquire 100% of the capital contribution of two enterprises, Sinh Nam Metal Company Limited (Vietnam) and UG Vietnam Mechanical and Electrical Company Limited. Sharing her experience, Ms. Nguyen Tran Thuc Anh, Investment Director of Covestcons Company Limited, said that the investment opportunities that Coteccons is looking for are enterprises that have a history of establishment and operation for a certain period of time, have certain marks and legacies in the market. "Therefore, we will have a cautious approach and spend a lot of time learning about the target company, business model as well as learning about the founder and management team before approaching the target company," Ms. Thuc Anh added.

Mr. Nguyen Cong Ai, Deputy General Director of KPMG Vietnam, said that the M&A market in Asia and Southeast Asia remained gloomy in the first 9 months of 2024, when the volume and value of transactions in the region remained low. However, Vietnam recorded a significant improvement in the value of M&A transactions, with a growth of 46% (compared to a decrease of 11.3% in the total transaction value of Thailand, Indonesia, Malaysia, Singapore and the Philippines) despite a decrease of 11.6% in transaction volume compared to the same period last year. "It is forecasted that the Vietnamese M&A market in 2025 will reach impressive numbers with many industries returning such as finance, education, healthcare..." - Mr. Nguyen Cong Ai forecasted.

Mr. Oh Hsiu-Hau, Managing Partner of Allen & Gledhill (Vietnam) believes that M&A in the Vietnamese market will continue to be vibrant, the real estate and healthcare sectors will continue to be bustling in the coming time, especially for industrial real estate. Regarding the real estate industry, lawyer Hsiu-Hau believes that changes in real estate laws with positive amendments have impacted this market. From there, it has created conditions for foreign investors to participate in the Vietnamese real estate market, through M&A deals. It is expected that in the coming time, in addition to real estate, there will also be many projects on renewable energy; healthcare... With the strong transformation of the M&A market, Vietnam is facing a new phase, ready to welcome large investment deals and is expected to strongly attract FDI capital by 2025.