Real estate dominates Vietnam’s M&A scene

By Kim Ngan   July 25, 2018 | 12:47 am PT
Real estate dominates Vietnam’s M&A scene
Real estate is expected to lead the local M&A market this year.
The real estate sector dominated by far Vietnam’s merger and acquisition (M&A) values in the first half of 2018.

The property sector accounted for a whopping 66.75 per cent of the total value, followed by banking and finance at 19.1 percent and manufacturing at 9 percent, according to a new report put out by the Vietnam M&A Forum.

Last year the consumer goods sector had topped, accounting for 57 percent of the total value, followed by real estate with 27 per cent.

The M&A deals in Vietnam were totally worth $3.35 billion in H1 2018, up 39 per cent year-on-year.

In the period, Singapore was the top M&A player in the realty sector, with state investor GIC Pte Ltd leading the way.

GIC bought a stake in real estate firm Vinhomes, Vietnam’s second-biggest listed company by market capitalization, for $853 million in April. It also bought into Vincom Retail earlier this year.

2018 started off with the acquisition of a 24 percent stake in the Sun Wah Tower, a Grade A office building in Ho Chi Minh City’s District 1, by Japan’s Nomura Real Estate Development.

In another major case, Malaysia’s Berjaya Land Bhd sold its entire 32.5 per cent stake in Berjaya Vietnam Financial Centre Ltd. to Vinhomes JSC and Can Gio Tourist City Corporation for VND884.9 billion ($38 million).

The residential segment witnessed five major M&A transactions in the first six months of the year. Among the foreign investors involved in these deals were CapitaLand, Frasers Property, and Keppel Land, according to JLL Vietnam, a real estate services firm.

“In the first half of 2018, the Vietnamese real estate market continued to show irresistible appeal to foreign investors and continued to witness high-value M&A transactions in a variety of segments such as residential, commercial, and industrial,” said Khanh Nguyen Associate director of Capital Markets at JLL Vietnam.

The Vietnam M&A Forum report forecasts that real estate, consumer goods, and banking and finance sectors will lead the Vietnamese M&A market this year.

Investors are most interested in property projects in big cities or new urban areas with a high population density, resorts and hotels in the downtown areas. 

In the consumer goods sector, they are looking to invest in quality local brands with good distribution networks.

In banking and finance, consumer finance, cards and financial services companies are major draws.

Telecommunication, energy, infrastructure, pharmaceuticals and education sectors are also likely to attract M&A interest, the report says.

Most of the foreign companies striking M&A deals in Vietnam over the past years have been from Asia, including Thailand, Singapore, Japan, and South Korea.

Thai companies have been big players, acquiring some major firms like retailers Big C and Nguyen Kim, wholesaler Metro Cash & Carry, maker of ceramic tiles Prime Group, cement producer Holcim, Binh Minh Plastics, and Tien Phong Plastics.

Late last year came the biggest deal of them all when Thailand’s TCC Group bought 53.59 per cent of Vietnam’s number one brewer Sabeco for $4.89 billion.

This made Thailand the biggest M&A player in Vietnam last year.

M&A experts see bright prospects for Vietnam’s M&A landscape despite challenges like the U.S. pulling out of the Trans-Pacific Partnership (TPP), the U.S.’s trade spat with China, continuing difficulties like the slow equitization of state-owned enterprises, few major divestments by the state, a shortage of quality enterprises for acquisition, and policy hiccups.

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