M&A in 2011 dominated by large enterprises

The event that FPT Corp. bought 50 percent stake in EVN Telecom was selected as one of the 10 major information communication and technology events in 2010 by the press community.

For years, telecom sector was not the priority for private enterprises; therefore, the prime minister approval of the above deal is a sign of starting merger and acquisition (M & A) activities amongst the mobile networks of Vietnam.

The acquisition of shares of EVN Telecom represented the aspirations of FPT to enter the mobile market by acquiring the cellular network to provide services and leverage existing infrastructure.

Nguyen Thanh Nam, CEO of FPT, said that FPT could apply for business licenses for mobile services, but it chose to buy back shares of EVN Telecom, because this was the fastest way for the company to complete all legal procedures to be able to provide services as other mobile networks.

In 2010, while Viettel and VNPT were aggressively deploying 3G services on mobile phone and laptop, despite providing the ADSL service well with the two above giants, finally, FPT was still a loser because it did not develop 3G service due to no permit and business license in telecommunications services.

Although EVN Telecom is also using CDMA technologies like S-Fone, this local mobile network drew much attention of FPT.

Nam said: “Investment for the telecom industry needs large capital, and FPT will convince investors to go along with the business”.

Dang Thanh Tam, Chair of Kinh Bac Corp (KBC) said, in the present moment, M&A will be more favourable than the setup or start a new plant from scratch. In the property sector, reduced purchasing power of the realty market with the difficulties of raising capital has been testing the endurance of investment and development projects, not least of which was exhausted to find a way to assign their projects.

KBC bought back some real estate projects in Hanoi in the form of M&A. Recently, Saigon Invest Group chaired by Tam has invested abroad, and acquired a factory specialised in producing Swiss watches with a hope to bring to Vietnam a type of technology precision engineering.

Recently, Prudential Vietnam Fund has acquired the capital contribution of Vina Development Co. Inc. of South Korea to invest in Blooming Park residential project and renamed it Imperia An Phu.

The project was built in An Phu Ward, District 2, HCM City on an area of over 2 hectares. In particular, Kien A JSC and HCM City Investment and Services JSC hold 30 percent and 10 percent stake in the project, respectively.

M & A is projected to be the way that many listed companies will choose in 2011 to expand the business instead of setting up a new factory.

Vinamilk (VNM) did not purchase shares of Hanoimilk as the market remoured, but it bought the dairy farm of the Lam Son Sugar Joint Stock Co. and built the model of the nucleus farm. VNM will invest in five farms and in 2011, this company will import about 10,000 cows.

According to experts, in 2011, the Vietnamese stock market is unlikely to receive a strong growth, whereas M&A will continue to grow in difficult economic times, but experts remarked that this year, this M&A activity would focus on quality than at present. – Dau tu chung khoan

Tags: M & A