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Vietnam continues to see foreign interest in the M & A market, with significant interest and completed deals in 2016, from Thai firms, in particular. Of the US$24.4 billion committed last year in Foreign Direct Investment US$ 3.4 billion was from M & A, according to the General Statistics Office.
Driving this continued interest is the growing middle class, increasing per capita income, and the resulting strong consumer demand. Not surprising then to see a lot of the M & A activity in the consumer sector. Fraser and Neave (Thai owned) took its holding in Vinamilk, Vietnam’s largest publicly listed company to over 16%. ThaiBev also completed the acquisition of Metro Cash and Carry, while Central Group recently acquired another major consumer group in the form of Big C Vietnam. The consumer sector remains very strong and Euromonitor has recently forecast that consumer spending will increase by 47% between 2017 and 2019.
Another major Thai deal in 2016, was the acquisition by Siam City Cement of Lafarge Holcim’s stake in Lafarge Holcim Vietnam. Lafarge Holcim Vietnam owns and operates one integrated cement plant and 4 grinding plants.
According to Vietnam Economic Times[i] energy and mining saw 8 deals completed with approx. US$ 500 million in value.
The real estate sector continued to attract a lot of attention with particular interest from developers and investors in Hong Kong, South Korea, Japan and Singapore and it is interesting to see the interest from Hong Kong from such groups as Gaw Capital, as Hong Kong investors have for a long time been more focused on China as opposed to Vietnam. Cushman and Wakefield reported that in the first 9 months of 2016, there were 24 deals completed with a value of well over US$ 900 million.
Whilst some commentators feel that there maybe another real estate bubble in the making the majority expect to see strong growth in the residential sector and hotel sector in 2017 and beyond.
With the Governments stated policy of improving the investment environment there would seem to be no reason why the level of M & A activity should not continue to grow.
[i] VET January 2017
Due to the Lunar New Year Holiday from January 26th to February 2nd the next Insights will be on February 6th 2017. Happy Year of the Rooster.