13 January 2017

International suitors line up to invest in Vietnam

Vietnam is the country in Southeast Asia known for its beaches, rivers and Buddhist pagodas, and in terms of mergers and acquisitions (M&A), for several notable inbound deals announced in 2016 which helped push overall M&A value for companies based in the country to the second-highest on record (2012: USD 10,094 million), according to Zephyr, the M&A database published by Bureau van Dijk. 

In all 1,050 deals worth an aggregate USD 8,923 million were announced during 2016, compared to 1,231 deals totalling USD 5,630 million in 2015, representing a 15 per cent decline by volume and a 58 per cent hike by value year-on-year. 

While domestic companies accounted for a significant portion of inbound M&A (some USD 2,242 million-worth of deals), acquirors from Thailand and Singapore together represented more than a third of the total value of M&A signed off during the 12 months, hardly surprising considering the top three deals by value targeting Vietnamese companies in 2016 featured buyers from these two countries.

In April 2016 family-owned Thai conglomerate Central Group of Companies acquired Groupe Casino’s Big C supermarket chain in Vietnam, pipping to the post international suitors that included South Korea’s Lotte, Berli Jucker of Thailand and Dairy Farm of Singapore, for an enterprise value of USD 1,135 million.

Some four months later, SET-listed Siam City Cement, Thailand's second-biggest cement manufacturer, kicked off the process of buying 65 per cent of Holcim Vietnam from building materials titan LafargeHolcim for USD 522 million and in so doing is gaining access to an integrated plant and four grinding facilities with an annual cement capacity of a little over six million tons.

The third-largest M&A deal in the country in 2016, according to Zephyr, is also the most recent as Singaporean food and beverage and publishing and printing giant Fraser & Neave spent USD 499 million on acquiring a little over 5 per cent of the country’s dairy giant Vinamilk from State Capital Investment Corporation of Vietnam, and then negotiated to buy a further 1.5 per cent stake from 30th December up to 27th January.

Zephyr shows that another notable M&A deal is a capital increase by VietJet: at the end of December the budget carrier sold almost a quarter of its capital to a raft of institutional investors, which included sovereign wealth fund GIC, Morgan Stanley and Mirae Asset Investment Management, ahead of a reported initial public offering expected to hit the market this year. 

In October the Nikkei noted the country’s first private low-cost airline was lining up a listing on the Ho Chi Minh City Stock Exchange, following on from a report in September by the Financial Times which said the carrier must first complete a domestic flotation, in line with domestic regulations, before heading to bourses in either Singapore or Hong Kong. Should it gain access to an overseas stock market then this would represent the first international listing by a Vietnam-based company.

© Zephyr