Mergers & acquisitions wave set to hit Vietnam, say analysts
An ambitious plan to privatise more than 400 of Vietnam’s state-owned enterprises (SOEs) by the end of next year will fuel a new wave of mergers and acquisitions (M&A) in the country, analysts say.
Vietnam may see M&A deals worth hundreds of millions of dollars next year as its government accelerates its partial privatisation process (also known as equitisation), said John Ditty, General Director of financial advisor KPMG Vietnam.
“M&A activity in Vietnam has risen sharply since 2008, but started to drop in 2013, and this year will also be a subdued year. The trend is expected to pick up in 2015 when the market sees more realistic expectations and transparency from sellers,” Ditty said at an M&A forum called “The Second Wave” in Ho Chi Minh City on August 7.
He said sectors of high interest in M&A activities will be fast-moving consumer goods, pharmaceuticals, agriculture and retail.
The privatisations of large, attractive SOEs like mobile network operator MobiFone, national air carrier Vietnam Airlines and garment firm Vinatex this year and next year will be a driving force behind the new wave of M&A, according to Ditty.
He suggested that the government continue to reduce its stakes in SOEs that have already been partially privatised in recent years such as BIDV, Sabeco, PV GAS and Bao Viet to provide further impetus for the investment market.
Andy Ho, managing director of investment fund VinaCapital, says though the government’s plan to offload shares in more than 400 SOEs in 2014-2015 is “ambitious”, it is “achievable”.
Ho said poor performance in the country’s stock index in the past offered “less motivation to sell the assets that the government owns.”
“The stock market has come up very nicely over the last three years, up 20 per cent every year, which is a very good indicator for the equitisation process,” said Ho.
Ho pointed out some challenges that foreign investors may face when planning to buy shares in Vietnam’s SOEs, including lack of information and transparency.
All relevant data about the equitisation process should be released in both Vietnamese and English so that international investors can evaluate its progress, he said.
In addition, consolidated financial reports should be prepared, audited, ahead of any IPO, he said.
Between 2008 and 2013, a wave of M&A deals hit Vietnam with a total value of $15 billion. The market is expected to receive a higher value of $20 billion during the 2014-2018 period on the improving economy and the impressive SOE privatisation plan.
An ambitious plan to privatise more than 400 of Vietnam’s state-owned enterprises (SOEs) by the end of next year will fuel a new wave of mergers and acquisitions (M&A) in the country, analysts say. Vietnam may see M&A deals worth hundreds of millions of dollars next year as its government accelerates its partial privatisation process (also known as equitisation), said John Ditty, General Director of financial advisor KPMG Vietnam. "M&A activity in Vietnam has risen sharply since 2008, but started to drop in 2013, and this year will also be a subdued year. The trend is expected to pick up...
An ambitious plan to privatise more than 400 of Vietnam’s state-owned enterprises (SOEs) by the end of next year will fuel a new wave of mergers and acquisitions (M&A) in the country, analysts say.
Vietnam may see M&A deals worth hundreds of millions of dollars next year as its government accelerates its partial privatisation process (also known as equitisation), said John Ditty, General Director of financial advisor KPMG Vietnam.
“M&A activity in Vietnam has risen sharply since 2008, but started to drop in 2013, and this year will also be a subdued year. The trend is expected to pick up in 2015 when the market sees more realistic expectations and transparency from sellers,” Ditty said at an M&A forum called “The Second Wave” in Ho Chi Minh City on August 7.
He said sectors of high interest in M&A activities will be fast-moving consumer goods, pharmaceuticals, agriculture and retail.
The privatisations of large, attractive SOEs like mobile network operator MobiFone, national air carrier Vietnam Airlines and garment firm Vinatex this year and next year will be a driving force behind the new wave of M&A, according to Ditty.
He suggested that the government continue to reduce its stakes in SOEs that have already been partially privatised in recent years such as BIDV, Sabeco, PV GAS and Bao Viet to provide further impetus for the investment market.
Andy Ho, managing director of investment fund VinaCapital, says though the government’s plan to offload shares in more than 400 SOEs in 2014-2015 is “ambitious”, it is “achievable”.
Ho said poor performance in the country’s stock index in the past offered “less motivation to sell the assets that the government owns.”
“The stock market has come up very nicely over the last three years, up 20 per cent every year, which is a very good indicator for the equitisation process,” said Ho.
Ho pointed out some challenges that foreign investors may face when planning to buy shares in Vietnam’s SOEs, including lack of information and transparency.
All relevant data about the equitisation process should be released in both Vietnamese and English so that international investors can evaluate its progress, he said.
In addition, consolidated financial reports should be prepared, audited, ahead of any IPO, he said.
Between 2008 and 2013, a wave of M&A deals hit Vietnam with a total value of $15 billion. The market is expected to receive a higher value of $20 billion during the 2014-2018 period on the improving economy and the impressive SOE privatisation plan.
