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Top 10 M&A deals in Vietnam in 1st half 2016

 

The value of M&A activities in the first half of 2016 in Vietnam reached $1.551 billion in 20 deals, according to the “South East Asia M&A Trend Report H1 2016” launched on July 19 by Mergermarket, an independent M&A intelligence service with an unrivaled network of dedicated M&A journalists based in 62 locations across the globe.

M&A activities in Vietnam in the first half fell 34 per cent compared to the same period last year, when the value was $2.351 billion in 29 deals. Mergermarket’s data runs from January 1 to June and is correct as at July 18.

The consumer sector stood out in the first half, driven by the divestment of Thailand’s Casino Guichard Perrachon in its Big C Supercenter in Vietnam for $1.1 billion. Other major deals were seen in energy, leisure, financial services, food, real estate and e-commerce.

M&A activities in Vietnam
(first half of 2014 to first half of 2016)

 

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Top 10 M&A deals in Vietnam in 1st half 2016

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Source: Mergermarket, July 19, 2016

 

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Mekong Capital invests $6.9m in restaurant chain Wrap & Roll

 

Vietnamnews, July 14, 2016

 

HCM CITY – Mekong Capital yesterday announced that its Mekong Enterprise Fund III Ltd has invested US$6.9 million in restaurant chain Wrap & Roll.

 

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This is the first investment by the fund.

Established in 2006 by two entrepreneurial friends in their early 30’s, Wrap & Roll Joint Stock Company is now recognised as a pioneering food chain in Việt Nam with 11 restaurants in Hà Nội and HCM City and four franchise outlets in Singapore.

This year it plans to launch a new concept restaurant chain to address a different market segment.

Chad Ovel, a partner at Mekong Capital, said: “The company has built it with the application of best practices and systematic processes seen in large international restaurant chains, which provide a foundation for the company to continue to open new restaurants at a rapid rate.”

Mekong Capital not only sinks money into companies but also supports them with strategic consultancy in many areas like human resources, restructuring, management practices and corporate finance.

The $112-million Mekong Enterprise Fund III, launched last month, is a private-equity fund focusing on consumer-driven businesses in Việt Nam such as retail, restaurants, consumer products, and consumer services.

Vietnam: M&As grow 9.7% in 2015 following high investor appetite

Source : www.dealstreetasia.com, March 9th, 2016

 

Mergers and acquisitions in Vietnam grew 9.7 per cent to touch $5.2 billion across 341 deals in 2015, according to research company Stoxplus.

The number of transactions also increased 23.1 per cent over 2014.

Meanwhile, an earlier report by the Institute of Mergers, Acquisitions and Alliances indicated that the value of 2015 stayed at $4.2 billion, surging 40 per cent year-on-year.

As per the Stoxplus report, the segment that dominated the region’s M&A activity were in the sub-$25-million range, categorised as small and medium deals, that amounted to a total of 288.

Meanwhile, inbound M&A into the country accounted for 46 per cent of the $5.2 billion figure last year, dropping 21 per cent year-on-year. There were 98 inbound deals from countries like Hong Kong, Thailand, Japan, South Korea, US, Malaysia and Singapore. While Japanese companies were the most active with 15 inbound investments, totaling $310.4 million, Hong Kong investors topped in terms of value, landing $1.1 billion in Vietnamese businesses.

Real estate, industrial goods and services, and retail were the most favoured sectors for overseas investors.

For domestic M&A, banking was the most vibrant area due to the country’s effort to restructure the financial market. The momentum is expected to continue in 2016 as Vietnam looks to create regional competitive lenders through consolidation.

 

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The ramp-up in deal-making was bolstered by Vietnam’s further integration into the global market, the report noted, calling 2015 “a year of new FTAs”. The country concluded negotiations for four free trade pacts, including those with the Eurasian Economic Union, the European Union, South Korea and the Trans-Pacific Partnership.

“FTAs are likely to boost capital flows into Vietnam in the coming time, both in terms of trading as well as investment, including M&A activities,” it said.

 

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Asian investors appetite

Fueled by the FTAs, Asian investors, typically South Korean, Japan and Thailand, came to the spotlight of inbound M&As into Vietnam last year.

With the Vietnam-Korean tie-up signed and taking effect, bilateral trade of the two countries is expected to double in 2017 to $70 million. Statistics of South Korean Embassy in Vietnam showed over 4,000 South Korean businesses investing in Vietnam. In upcoming years, this figure is expected to surpass 10,000 businesses.

For inbound M&A deals, South Korean investors conducted four deals in 2015 with total investment value of $62.5 million, including Lotte Korea Group acquiring Diamond Plaza, Koswire Co Ltd acquiring Dong Bang Stainless Steel Co Ltd, Dongbu Insurance Co Ltd acquiring Post and Telecommunication Insurance and Shinhan Investment Corporation acquiring Nam An Securities Company.

Meanwhile, capital flow from Japan has dropped in recent years, but is expected to bounce back after TPP has been signed.

Japanese firms increased investments in textile, a favourite investible bet. One such case is Itochu, which purchased 5 per cent equity stake inVinatex – the leading textile corporation in Vietnam – back in 2014. After the deal, Itochu continued to sign a business alliance with Vinatex to build its capacity on dyeing and textile materials production.

“By observing the current M&A market, we find that Japanese investors are setting sights on Vietnamese market for some sectors such as travel and leisure, financial services, retail, oil & gas, real estate and industrial goods and services,” StoxPlus said.

 

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Among ASEAN investors, Thailand was the most active M&A partner. Home-grown Thai corporates have been very successful in the domestic market, and are pursuing growth overseas, and Vietnam becomes one of their potential investment destinations with numerous opportunities and advantages that can be exploited.

In 2015, Thai firms completed six M&A deals in Vietnam, the highest number accounted for over the last five years. The M&A value stood at $209 million.

 

Central Group is the most active Thai buyer in Vietnam with two acquisitions of electronics retailers Nguyen Kim and Pico Mart, according to Stoxplus. It was rumoured last year that the Thai retailing major acquired 49 per cent of Pico after doing the same to Nguyen Kimearlier in the year. However, Central Group then declined the speculation in an email sent to DEALSTREETASIA. But Stoxplus believes that the number was no less than $150 million for both Vietnamese investees.

 

Real estate as a hit

Vietnam M&A market in 2015 continued to witness the upward trend in real estate sector after a buoyant 2014, especially for deal value. According to StoxPlus’ database, real estate was the most attractive sector for foreign investors with 19 deals totaling approximately $1.64 billion.

Typical investments made last year include Gaw Capital Partners’involvement in Empire City and Indochina’s assets, Chow Tai Fookbuying Nam Hoi An project, Creed Group investing in An Gia, and Warburg Pincus adding follow-on investment in Vincom Retail.

The strong GDP growth and warming real estate market of Vietnam are expected to continue to boost M&A activities in 2016. Jen Capital is reportedly looking for a potential M&A target in Vietnam real estate market. Meanwhile, a lot of local developers, including Hoang Quan andNam Long, are planning to raise fund from foreign investors.

 

Turning SOE privatisation into M&A

According to a government report, only 104 state-owned companies were privatised, accounting for 40 per cent of the IPO target of the year.

For a state corporate IPO to become an M&A deal, the participation of strategic investor is crucial, given their allocated stake of at least 15 per cent. However, attracting strategic investor has been consistently a constraint for these firms.

Participation of foreign investors in such IPOs is still very limited. The Stoxplus report shows that of 248 recorded deals during the past five years, inbound M&As from IPO held a modest value of only 5 per cent of the total M&A value from IPO. Remarkably, all deals had the involvement of Japanese investors.

They include partnership between construction firm Cienco 1 and Yen Khanh – Hassyu joint venture, Vinatex and Itochu, and construction firm TEDI and Oriental Consultant Co Ltd.

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Looking forward, “blockbluster” IPOs of Mobifone, cement producer Vicem and Saigon Trading Group are expected to happen during the 2016 – 2018 period.

2015 also marked significant improvement in legal framework on foreign investment, supporting M&A activities in the coming years, as Vietnam slashed the foreign ownership limit in the stock market.

In addition, the revised investment law has offered foreign investors simplified investment procedures.

“These legal improvements, coupled with Vietnam’s full market openings in 2015 as well as the local economy’s heightened productivity rates, suggest that now is the right time for buyers and sellers to actively engage in M&A transactions,” Stoxplus commented.

 

 

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