As predicted, Vietnam’s M&A activities cooled down in the last months of 2022. However, 2023 will likely be a successful year for M&A activities in Vietnam.
In 2022, M&A transactions in Vietnam tended to be made more cautiously, partly due to concerns about global geopolitics and the risk of high inflation affecting cross-border transactions.
In the first 10 months of 2022, Vietnam’s M&A activities have a downward trend and have returned to pre-pandemic levels. The total value of M&A transactions reached 5.7 billion USD, down about 35.3% over the same period last year, while the number of transactions decreased to less than 350 transactions, equivalent to a 50% decrease compared to about 700 transactions in 2021.
The three most attractive M&A sectors in 2022 include real estate, renewable energy, and consumer goods. M&A deals with over 100 million USD transaction values happened in those three fields.
Specifically, the highest transaction of 2022 was in the real estate field. Capital Place, a class A office building, located in the center of Hanoi belonging to CapitaLand Investment, was purchased by one of the leading companies in the industry with a value of up to 523.4 million USD.
Another notable M&A deal in the real estate sector is the recent deal between Novaland and Warburg Pincus - a leading international corporation specializing in growth investment opportunities to expand land banks and promote essential projects. Novaland received an investment of 250 million USD from Warburg Pincus.
In the renewable energy field, EDP Renovaveis, S.A. (EDPR), a famous renewable energy supplier headquartered in Madrid (Spain), signed a contract with Xuan Thien Group to buy two solar power projects with a total capacity of 200MW in Ninh Thuan province. The transaction value reached 284 million USD.
In the consumer goods sector, The Sherpa Company Limited (under Masan Group) acquired 65% of Phuc Long Heritage capital for 260.6 million USD. Seletar Investments, Seatown Private Capital Master Fund, and Periwinkle (Singapore) have acquired a 36% stake in Golden Gate for about 234 million USD.
With the global economy being unstable, Vietnam's economy is forecasted to enter a period of slower growth after a rapid recovery from the COVID-19 pandemic. The country's GDP growth in 2022 is anticipated to be about 8%.
Even if the growth rate slows to around 6 - 6.5% in 2023 and beyond, Vietnam is still a rising star in the global market, as most other economies are predicted to have much lower growth, even negative growth. In that context, M&A opportunities in Vietnam can still be abundant in 2023, despite concerns about the prolonged difficulties of the global economy.
Capital flows from global private equity funds are becoming the main driving force for the M&A market to accelerate. According to a 2022 report by Bain & Company, private equity funds in Asia are at a record high of 650 billion USD.
In Vietnam, PE Funds and Venture Capital still grew strongly in the first months of 2022, despite bad debt and uncertainties in the capital market. Vietnam’s innovation startup ecosystem in 2022 is forecast to see an investment of about 2 billion USD, maintaining the form of a rising star among startups in Southeast Asian countries.
The IPO market in Southeast Asia is also expected to have a brighter future in 2023. The current valuations may be lower for technology companies. However, those with a strong business background and proven profitability will still be able to achieve the best market valuations and benefit from global capital markets.
The above signs show that the M&A market in Vietnam is forecasted to remain active, especially in the context of tight domestic capital, where many businesses are forced to restructure, sell assets, and call for investment due to financial pressure.
Compiled by VietnamCredit