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Vietnam among most attractive M&A destinations for foreign investors

Released at: 16:19, 30/05/2018

Vietnam among most attractive M&A destinations for foreign investors

Photo: Hong Nhung (VET)

Standard Chartered Bank seminar hears that country's young population, steady economic growth, and SOE equitization lay behind appeal.

by Khanh Chi

Vietnam is the most attractive destination in ASEAN in merger and acquisition (M&A) activities, experts told the “Bridging ASEAN Seminar - M&A” held recently in Ho Chi Minh City. Different from Singapore and Malaysia, Vietnam’s attractiveness comes from its young population, steady economic growth, and, especially, the equitization of State-owned enterprises (SOEs).

Organized by Standard Chartered Bank in cooperation with the Malaysia Business Chamber Vietnam and the Singapore Business Group, the seminar attracted over 100 representatives from Asia, including from Vietnam. This was the second Standard Chartered-sponsored Bridging ASEAN Seminar, following the first in May 2017 on ASEAN trade and investment, and reinforces the bank’s strong commitment to supporting its clients to realize their growth ambitions both in their domestic market and overseas.

Thai Bev bought Sabeco in a deal worth nearly $5 billion last year, while 2016 saw the Central Group outlay $6 billion on acquiring Big C. These were two of the Top 5 M&A deals in the ASEAN region.

“That they are both in the consumption sector is quite understandable, as Vietnam is a large market with over 90 million people and has a very young population structure compared to other countries in the region, along with stable economic growth,” said Mr. Nirukt Sapru, CEO Vietnam and ASEAN and South Asia Cluster Markets at Standard Chartered. “Every dollar invested in the consumption sector in Vietnam can be profitable.”

Vietnam stepping up the equitization of SOEs is also winning favor among many investors. There were 21 State-owned divestments last year and 64 so far this year, making Vietnam more attractive, he added.

“Many companies are going to be equitized and in many sectors, not only consumption, such as aviation, telecommunications, and energy,” said Mr. Ralf Pilarczyk, Head of M&A for ASEAN at Standard Chartered. “I believe this will help local businesses change their ways of interacting with the international market and develop to a new level.”

Law firm Baker & McKenzie predicted a total of 331 domestic and cross-border M&A transactions in Vietnam over the next two years. The consumption, retail, and real estate sectors will remain attractive to foreign investors.

Experts also provided their views on M&A trends and themes in ASEAN, including in Vietnam. They showcased how Standard Chartered is working with its clients in handling complex, high profile, cross-border investments, acquisitions, and divestitures.

“ASEAN is currently the world’s sixth-largest economic bloc, with an estimated population of 650 million,” said Mr. Theng Bee Han, President of the Malaysia Business Chamber. “It is a major global hub of manufacturing and trade as well as one of the fastest-growing consumer markets in the world. M&A activity is increasing in Southeast Asia and Greater Asia, capitalizing on the investment boom in the emerging markets of the region. We are supportive of the bank’s aspirations to assist ASEAN companies as their operations evolve and grow more complex, as do their corporate finance needs.”

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