The M&A Landscape In Vietnam
Vietnam has remained an attractive destination for foreign investors: In 2020, the total FDI capital to Vietnam was USD28,53 billion. Investment in the form of capital increase is the only increasing proportion of the total FDI that grew by 10,6%. Foreign investors contributed capital to domestic enterprises mainly in the field of processing technology and manufacturing (USD 13,6 billion) as well as water and energy sector (USD 5,1 billion).
Main investors still come from Japan, Korea, Singapore, and China. The retail, consumer goods, and real estate are also very active, and investors tend to focus on leading companies as they have a big market share and strong brand value.
The main drivers of Vietnam’s M&A market are:
Privatization of state-owned enterprises (SOE). According to Resolution No. 01/NQ-CP issued by the Government in 2021, one of the key tasks in 2021 was to continue strengthening the restructuring, equitisation and divestment of SOEs. The government also aims to publicize equitized enterprises that are eligible but are not listed nor registered for trading on the stock market.
Trade liberalization as a result of CPTPP, EU- Vietnam FTA, and so on.
Resolution No. 42 on pilot program of handling bad debts of credit institutions is also the main driving force of M&A in real estate sector as bad debts in real estate sectors accounts for a high percentage of the total bad debts in Vietnam’s market.
In the middle of June 2020, according to VinGroup, a group of investors led by KKR, including Temasek, spent VND 15,100 billion VND (USD 650 million) to buy more than 200 million shares of VHM, equivalent to 6 % shares of VinHomes (a subsidiary of VinGroup).
On 9 April 2020, FWD Group announced its acquisition of Vietcombank Cardif Life Insurance Company (VCLI), a joint venture between Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) and BNP Paribas Cardif.
At the end of June 2020, after approval by the State Bank, Orient Commercial Joint Stock Bank (OCB) successfully issued 86.68 million shares to Aozora Bank from Japan, through which Aozora officially became to become a foreign shareholder owning 15% of the capital. The estimated value is more than VND 3,100 billion.
OCB also officially increased its charter capital from VND 8,767 billion to VND 10,959 billion in October 2020.
KEB Hana became a major shareholder of Vietnam Development Bank (BIDV) by acquiring 603.3 million shares, equivalent to 15% of BIDV’s capital, in November 2019
Bao Viet Group has completed the private issuance of more than 41 million shares, approximately 6% capital, for Sumitomo Life Insurance Company (Sumitomo Life), a strategic shareholder from Japan.
In early April 2020, Stark Corporation (Thailand) bought 100% of the shares (USD 240 billion) of Thinh Phat Electrical Cable Joint Stock Company (Thipha Cables) and JSC Non-ferrous Metal and Copper Plastic JSC. Vietnam (Dovina).
In November 2019, Thai WHA Utility and Power Company purchased 34% of equity in Duong River Surface Water JSC.
Mitsui & Co. (Japan) bought 35.1% of Minh Phu Seafood Corporation’s capital.
In April 2019, DHG Pharma officially became a subsidiary of Taisho after this Japanese unit raised its holdings to 50.78% of total shares.