Consumers goods, retail, real estate continue to lead M&A market

By Minh Nga   August 8, 2019 | 08:17 pm PT
Consumers goods, retail, real estate continue to lead M&A market
The retail and consumer good sectors are expected to see hectic M&A activity this year. Photo by VnExpress/Minh Nga.
Vietnam's mergers and acquisitions market is expected to be worth $7.6 billion this year, with action mainly in property, consumer goods, and retail.

This was the projection made by analysts at the annual Vietnam Mergers and Acquisition Forum (MAF) this week, the country’s biggest M&A and investment networking event.

Nguyen Thi Van Khanh, Investment Director at real estate service firm JLL Vietnam, told VnExpress that investors are switching to real estate M&A since it has become more and more difficult to find property projects not affected by procedures related to compensation and resettlement of affected people.

Singaporean property developer Keppel Land has announced plans to acquire 60 percent of the ownership of three land lots measuring 6.2 hectares (15.3 acres) in Ho Chi Minh City via a $56 million acquisition deal between its subsidiary and Phu Long company.

Lotte Land, the property subsidiary of South Korea’s Lotte Group, has joined hands with Vietnam's FLC Group to establish Lotte FLC Joint Stock Company.

Khanh’s statement was corroborated by experts at MAF who said issues related to land ownership are the main reason for M&A deals in the property sector.

Le Song Lai, Deputy CEO of Vietnam’s sovereign fund State Capital Investment Corporation (SCIC), said: "It takes a long time and involves complicated procedures to get a clear title."

Dominic Scriven, Chairman of Dragon Capital, a leading investment fund, said it is a common belief among businesses that procedures related to land ownership in Vietnam are labyrinthine.

The property, consumer goods, and retail sectors have been predominant in the M&A market since 2018.

Of the $9.3 billion worth of deals in the 12 months to July this year, real estate-construction, multi-sector businesses and consumer goods accounted for 20 percent, 19.7 percent and 11 percent respectively.

Singaporean sovereign wealth fund GIC Pte Ltd last year invested $1.3 billion in leading property developer Vingroup and related entities. GIC bought ordinary shares and offered a debt-like instrument to Vingroup’s property subsidiary Vinhomes.

It also invested nearly $100 million to acquire some 24.5 million shares in consumer giant Masan Group Corporation to increase its stake in the company to 6.5 percent.

In September 2018 Korea’s SK Group acquired a 9.5 percent stake in Masan Group, a Vietnamese consumer giant, for $470 million.

In June this year Saigon Co.op bought out Auchan Retail's business in Vietnam comprising 15 stores the French retailer closed that month, three others that were still open and reportedly profitable, and e-commerce and online activities.

Andy Ho, Chief Investment Officer at Vietnam’s leading investment fund VinaCapital, told the forum that investors are now looking at Vietnam "as a fast growing market, a market of 100 million consumers."

Deputy Minister of Planning and Investment Vu Dai Thang said Vietnam now has many elements making it attractive to M&A deals as economic factors including its economic growth, foreign direct investment (FDI) and the number of new businesses are now all "stable and positive."

Vietnam’s GDP grew at 6.76 percent in the first half of 2019, the second highest rate since 2011. Growth last year was 7.08 percent, the highest in a decade. The country targets growth of 6.6-6.8 percent this year.

Besides, trade agreements like the EU-Vietnam Free Trade Agreement signed in June this year and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) inked in March last year have contributed to attracting foreign investment to Vietnam, including through M&A deals, he said.

Official data show that the value of M&A deals in the first seven months of this year to be $5.43 billion. Last year, the country recorded $7.6 billion of total value in M&A contracts, dropping 25.5 percent against 2017.

Despite the decrease, Vietnam seized the second spot in the M&A value rank in Southeast Asia, standing just behind Thailand, which registered $9.3 billion and enjoyed a growth of 3.3 percent.

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