HCMC – Mergers and acquisitions (M&A) will continue to be active this year, especially in the fields of finance and property, said Dang Doan Kien, country manager of Aureos Capital in Vietnam.
M&A deals in Vietnam amounted to US$2.67 billion in January-September last year, 150% over all of the previous year, Kien told the Daily on the sidelines of the Investment Day held in HCMC on Thursday.
The consumer goods sector had the most M&A transactions worth over US$1 billion, 38.6% of the total, followed by finance with US$453.4 million, 16.9%. The M&A capital was sourced mostly from overseas, 81.3% of the total, while domestic funding made up the remainder.
Many M&A deals in 2011 resulted from the closing of the investment funds that had been in place since 2003. This year will see more divestments, Kien predicted.
M&A activity will remain strong in the finance sector, he noted, as local banks are in the process of restructuring.
However, foreign investors may be discouraged by the complicated legal framework in Vietnam, including regulations on limiting foreign ownership.
Meanwhile, investors are not keen to acquire securities companies. Though Vietnam’s commitments to the World Trade Organization (WTO) allow foreign investors to establish wholly-owned securities firms here in the country, the prospect will remain bleak.
In fact, foreign investors did purchase local securities firms last year, but their purpose was to take over share trading software, since the amount required to buy into a securities company in Vietnam is lower than that to purchase such software.
The real estate sector will see the busiest M&A activity, Kien forecast, explaining the property market has much demand for capital and huge potential to develop further, while domestic funding is costlier than from Japan or Singapore.
Unlike in 2007, foreign investors can find it easy to gain access to land supplies.
