M&a growth remains strong this year

Merger and Acquisition (M&A) transactions in Vietnam are expected to continue strong growth this year, industry experts said.

Mayooran Elalingam, head of Mergers & Acquisitions of Deutsche Bank for Southeast Asia, said at the M&A Vietnam Forum 2011 in HCMC last week that M&A transactions here in the nation had amounted to US$1.57 billion since early this year, or 93% of the 2010 figure. So, the value of M&A deals is expected to rise to a new high this year, extending the rising streak.

The average size of an M&A transaction here is modest compared with other Southeast Asian markets but its growth is quite fast, said Elalingam.

According to Thomson SDC, the average M&A deal size in Vietnam was US$5 million last year, compared with the mean size of US$39 million in the region.

Elalingam noted M&A activity in Indonesia was growing well with deals worth US$10 billion. He sees a similarity in Vietnam and Indonesia, meaning Vietnam will soon catch up with Indonesia in terms of M&A growth.

Foreign investors have had a lot of queries about Vietnam in the last two years, especially last year, showing their interest in the local market. Previously, they looked for deals in Indonesia, but now in Vietnam, said Elalingam. “However, many Vietnamese enterprises are still not ready for such deals.”

To Hai, CEO of VietCapital Securities JS Company, forecast M&A activity would pick up in sectors such as consumer products production and retail. M&A deals in the banking sector this year will continue the growth trend of last year, with several M&A transactions expected to be forthcoming this year.

However, such transactions in the banking system are not publicized given the lack of a legal framework for the activity in the sector, said Nguyen Manh Dung, deputy general director of Deposit Insurance of Vietnam (DIV).

To Hai of VietCapital Securities projected small and medium enterprises would be targets for M&A this year.

According to the Vietnam Competition Authority, M&A deals in Vietnam last year numbered 345, with a total value reaching a record high of US$1.75 billion. – SGT

Tags: Vietnam M&A