Mergers and acquisitions market expected to grow

Merger and acquisition activity in Viet Nam is expected to grow 30-40 per cent annually over the next few years, said an official from the Viet Nam Chamber of Commerce and Industry in HCM City.

The advantages and disadvantages for local enterprises were exposed in last year’s economic crisis, so enterprises need to restructure to capitalise on new opportunities by restructuring themselves, deputy chairman Nguyen The Hung told a conference in HCM City yesterday.

With global recovery, greater opportunities are emerging for Vietnamese enterprises to access corporate governance, financial expertise, technology, human resources and market information on a global scale via merger and acquisition.

M&A transactions are purchases of an equity stake with a specific strategic element, not short-term or purely financial investments, he said.

M&As raise competitive competence, business and other resource efficiency and create combined value by taking best advantages of both sides, he said.

M&As are necessary to improve competitiveness of local firms since most of them are small and medium sized, usually needing capital for production and trading, while their technology and human resources are still poor, Hung said.

The M&A market has a very large potential in Viet Nam, he added.

Hiroshi Abe of the Daiwa Securities Capital Markets Co, Ltd said more and more Japanese companies want to establish long-term partnerships with Vietnamese companies in sectors including automobile technology, IT services, construction, transportation and finance.

Last year saw around seven deals between Japanese and Vietnamese companies worth US$27.7 million. Five such M&As worth $56.3 million have been made so far this year.

Since they began in 2000, M&As have been on the rise constantly, Hung said, adding that many big international groups are present in Viet Nam because they purchased a part or entire stakes at local companies.

The majority of M&A activities in Viet Nam were in finance, banking and industrial production.

Notwithstanding a potential market, M&As are still in an early development stage here with Viet Nam’s existing legal framework still evolving to become more practical, Hung said.

The Government needs to amend laws to meet the increasing demand for M&A deals, he said. — VNS

Tags: Mergers and acquisitions, Vietnam M&A