M&A to thrive with equitization in 2017

More drastic equitization will capture the interest of foreign investors, said experts at the Vietnam Access Day 2017, an event held by Viet Capital Securities Company (VCSC) from Monday to Thursday.

Nguyen Vinh Tuan, head of investment banking at VCSC, said the M&A market was bustling last year with foreign enterprises purchasing or holding controlling stakes in companies active in Vietnam. The major deals mainly involved investors from Japan, South Korea, Singapore, and Thailand.

For example, Big C was taken over by Central Group, and LafargeHolcim Vietnam by Siam City Cement of Thailand. Tan Tien Plastics was acquired by Dongwon of South Korea. The stake held by SCIC in Vinamilk was transferred to Singapore’s F&N.

M&A activity heated up in 2016 as the equitization of State-owned enterprises (SOEs) accelerated. This trend shall continue this year when multiple State giants in the fields of energy, infrastructure and telecommunications will be floated, which investors are looking forward to.

Besides, many startups and small-sized companies have contacted the investment banking department of VCSC to look for foreign funds and attract more finance. Those startups that have reaped initial successes will be the center of M&A deals in the coming years, Tuan said.

Talking to the Daily on the sidelines of the event, Louis Nguyen, chairman and CEO of Saigon Asset Management (SAM), said Vietnam in recent years had had a lot of startups, especially in the field of technology, many of which had proven successful. He believed a number of investors were looking to make direct investment in such firms, rather than via investment funds.

Investors from Japan, South Korea, Singapore, Taiwan and Thailand are eyeing Vietnam, he noted. In 2017, with the initial public offering (IPO) of such enterprises as Mobifone, PV Oil, Satra and Becamex IDC, foreign investors will be given a wider range of choice.

Tuan predicted retail, consumption, real estate, infrastructure, energy and telecommunications would be the magnets this year. As for banking, he believed it was still too soon to talk about the trend of M&A here.

One of the obstacles to foreign investors, according to Louis Nguyen, is the lack of transparency in business operations and finances, which makes investors eager at first and frustrated later. Thus, those wishing to lure capital through M&A deals should make their activities transparent.

To enhance the presence of foreign investors in the M&A market of Vietnam, Tuan suggested certain companies be permitted to raise their foreign ownership to 100%. In addition, the stock market of Vietnam should be given more State support to become an emerging market instead of a marginal one as at present.

The final key factor, according to Tuan, is the development of Vietnam, with the stability of macroeconomic indicators like inflation and the exchange rate.

The Vietnam Access Day is an annual event organized by VCSC, with the participation of more than 200 foreign individual and institutional investors who are seeking investment opportunities in Vietnam. At this event, many Vietnamese enterprises inform foreign investors of their operations and growth potential.