Analysis of M&A landscape in Vietnam: Opportunities and emerging trends

In recent years, mergers and acquisitions (M&A) activities in Vietnam have seen significant progress, capturing the interest of numerous domestic and foreign investors, particularly in sectors such as healthcare and finance. Vietnam’s growing population of working-age individuals, coupled with an open economy and favorable policies, positions it as an appealing destination for international investors.

This article aims to provide insights into the current market landscape, notable transactions, and emerging trends in Vietnam’s M&A market. From an overview of M&A activities in 2023 to typical deals and outstanding trends, we delve into key developments shaping the M&A landscape in Vietnam, including M&A opportunities and the analysis of recent M&A transactions and trends.

Through this analysis, investors can gain a deeper understanding of opportunities and challenges in Vietnam’s dynamic market environment.

1. Overview of Vietnam’s M&A market in 2023

1.1 World and Vietnam M&A market landscape

According to data from KPMG Vietnam, in the first 10 months of 2023, global M&A activities slowed down due to political and economic uncertainties, along with rising inflation and tight monetary policy leading to high-interest rates. This instills fear among investors as they face escalated transaction values. Reflecting a departure from the global trend, Vietnam’s M&A market witnessed a slowdown, marked by a 23% decrease in total transaction value compared to the year’s onset, totaling 4.414 billion USD from over 260 deals, with an average deal value of 54.5 million USD [1]. Despite the prevailing stagnation in global M&A activity throughout 2023, numerous potential factors suggest a resurgence in deal-making in the forthcoming years.

1.2 Industry attracting investment capital

Data also indicates that 80% of the transaction value stemmed from the healthcare, finance, and real estate sectors. Notably, real estate M&A transactions remained prominent during the first ten months of 2023, accounting for 23% of the total transaction value and two-fifths of the largest M&A deals. Meanwhile, the financial sector accounted for 47% and healthcare accounted for 10% of the largest M&A deals.

1.3 Foreign investment trends

According to some experts, Vietnam’s M&A market has been characterized by a surge in both transaction value and volume, akin to a “hot trend”.

Historically, domestic investors have been the primary drivers of Vietnam’s M&A market. However, during the first ten months of 2023, foreign investors took precedence, dominating all top five positions in terms of transaction value. Notably, Japan, Singapore, and the US have emerged as the most active foreign investors, showcasing a growing interest in investing in Vietnam. These three investors collectively account for over 70% of the total announced transaction value, highlighting the increasing attractiveness of Vietnam for foreign investment.

2. Typical deals in Vietnam’s M&A market in 2023

In 2023, notable transactions included Japan’s Sumitomo Mitsui Banking Corporation (SMBC) acquiring a 15% stake in Vietnam Prosperity Joint Stock Commercial Bank (VPBank) for 1.45 billion USD. Previously, SMBC had purchased 49% of VPB in FE Credit, a consumer finance company which held the largest market share in Vietnam’s unsecured consumer loan market in 2021 [2].

In the real estate sector, a significant deal involved Hong Kong’s ESR Group Limited acquiring shares of BW Industrial Development Joint Stock Company (BW Industrial) for 450 million USD. BW Industrial is renowned as one of the largest and fastest-growing industrial and logistics developers in Vietnam[3]. The infusion of capital is aimed at maintaining its leading position in developing essential infrastructure for the evolving economy and capitalizing on the production shift to Vietnam.

Also in real estate sector, Gamuda Land (Malaysia) acquired 100% of shares worth 316 million USD in Tam Luc Real Estate Group to expand in Vietnam. This investor is planning a high-end complex project worth $1.1 billion on land acquired in the city center of Thu Duc City[4].

In the medical field, Thomson Medical Group (Singapore) acquired a controlling stake in the Franco-Vietnamese Hospital for more than 380 million USD, marked the first appearance of Thomson Medical Group in Vietnam.

In the consumer sector, Bain Capital, a prominent US-based private investment fund, invested 200 million USD into Masan Group[5]. This is an important milestone for the domestic consumer industry and demonstrates the industry’s attractive prospects.

The prevailing trend in M&A deals appears to be the repurchase of shares, with joint ventures expected to emerge as a popular trend in the near future, as noted by some experts. This shift towards joint ventures is anticipated to become increasingly prevalent, particularly as strategic partnerships gain traction. Joint ventures offer greater flexibility in capital allocation, facilitate the enhancement of supply chain capabilities, and bolster competitiveness within the market.

Contact us today for Mergers & Acquisitions guidance via email at inquiry@staging-01e4-plfvn.wpcomstaging.com or +84913 902 906 or Zalo | Viber | WhatsApp to receive a free 30-minute consultation.

Find out other articles relating to M&A transactions:

• How Competition Law shapes M&A transactions in Vietnam?
• Due Diligence in Vietnam: Identifying potential risks before entering an M&A transaction
• Insights on common challenges in merging businesses in Vietnam

3. Outstanding trends in M&A activities in Vietnam

According to the assessment of experts at the GMAP 2023 Conference (Global M&A Partners), a global collaboration comprising 30 M&A firms spanning 50 countries and regions across the Americas, Europe, and Asia-Pacific, there has been a notable influx of new capital from European and American companies into the Vietnamese market. Although Vietnam’s M&A market is not large in scale, it still maintains its attractiveness. Notably, industries such as daily consumer goods – retail, manufacturing – food processing, logistics – warehousing, and finance – fintech are considered industries that many foreign investors are interested in besides the manufacturing electronic sector[6].

Furthermore, according to the IMF’s GDP growth forecast, Vietnam is projected to achieve a growth rate of 5.8% in 2024, positioning it among the top 20 fastest-growing economies globally[7]. This outlook underscores the promising prospects for investors seeking strategic opportunities within Vietnam’s dynamic market landscape in the year ahead.

In conclusion, amidst the backdrop of globalization and economic fluctuations, Vietnam’s M&A market stands out as a shining beacon in both the regional and global economy. However, to fully harness the potential and opportunities offered by this market, it is important to foster consensus and foster close collaboration among the government, businesses, and investors. Only through collective cooperation and joint effort can Vietnam’s M&A market truly flourish and make substantial contributions to the prosperity of the national economy.

For more information, you can refer to our Company Formation and Mergers and Acquisitions services. We offer comprehensive legal, financial, and accounting solutions for foreign investors, empowering them to establish a robust business foundation and develop effective market expansion strategies.

Contact us today via email at inquiry@staging-01e4-plfvn.wpcomstaging.com or +84913 902 906 or Zalo | Viber | WhatsApp to receive a free 30-minute consultation.

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