Global M&A Trends Report |
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Vietnam |
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(Asia Pacific)
Firm
Tilleke & Gibbins
Contributors
Tram Ngoc Bich Nguyen |
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| With respect to private M&A, what are three things on top of mind for M&A practitioners in your jurisdiction? | Three things top of mind for private M&A practitioners in Vietnam are:
Vietnamese sellers have not quite adjusted to the new normal and are still demanding high prices when buyers have less capital to invest due to higher interest rates in foreign markets. This is especially difficult when sellers see Vietnamese unicorns listing on overseas markets at jaw-dropping valuations in recent memory. Transaction structuring is always a key issue in Vietnam, especially structuring to stay "local" when foreign investment requirements would debilitate the business or minimize capital gains tax for the sellers. Antitrust is an emerging issue as investors grow their profitable Vietnamese businesses and expand into other areas because the reportable thresholds triggering antitrust reviews are low compared to other jurisdictions. |
| With respect to private M&A, where does your jurisdiction see most deal activity? | Most private M&A deal activity is categorized as mid-market. |
| With respect to private M&A, what sector sees the most deal activity in your jurisdiction? | Most private M&A deal activity is seen in the Manufacturing sector. |
| What are your predictions for private M&A deal volume in your jurisdiction during 2024? | Private M&A deal volume in 2024 is predicted to be greater than 2023 deal activity. Increasingly, businesses are relocating from China to Vietnam. More and more investors are looking seriously at Vietnam for long-term strategic partnerships. In some cases, foreign investors see M&A as a faster way to enter the Vietnamese market than the normal business establishment process, not least because it avoids the hassle of obtaining new operational licenses and permits. For example, Japan's SMBC acquired 15% of VP Bank with deal value of USD1.5 billion. In addition, recent regulatory changes in Vietnam, including Decree 08 for Corporate Bonds and Circular 10 for Onshore Bank Loans, have relaxed requirements and fostered business expansion. The State Bank of Vietnam's reduction in bank interest rates is fueling growth in the real estate sector, while the ambitious goals set by the Prime Minister's Power Development VIII signal a strong commitment to energy transition. Additionally, Vietnam's strengthened business partnerships with the U.S., Japan, and China in late 2023 are expected to attract increased investment across various sectors, including Real Estate, Energy, Health Care, Consumer Goods and Industrial Manufacturing. |
| With respect to public M&A, what are three things on top of mind for M&A practitioners in your jurisdiction? | Valuation expectation gaps are not an issue for acquisitions of publicly listed companies, because both sides use similar calculation metrics. Foreign investment restrictions are less of an issue for publicly listed companies, which tend to be parent companies of a corporate group and have business lines open for foreign investment. However, issues such as compliance with ESG requirements, and transaction structuring around the public tender offer requirements are more pressing for M&A practitioners. |
| With respect to public M&A, where does your jurisdiction see most deal activity? | Public M&A deal activity is categorized as top-tier as publicly listed companies tend to be much larger. |
| With respect to public M&A, what sector sees the most deal activity in your jurisdiction? | Most public M&A deal activity is seen in the Real Estate and Energy sectors. Recent regulatory developments have loosened requirements and clarified uncertainty in these sectors. |
| What are your predictions for public M&A deal volume in your jurisdiction during 2024? | Public M&A deal volume in 2024 is predicted to be greater than 2023 deal activity. We do not expect significant differences in the drivers mentioned for private M&A above. |
| Please share any other insights with respect to M&A in your jurisdiction: | Foreign investors see M&A as a faster way to enter the Vietnamese market than the normal business establishment process, not least because it avoids the hassle of obtaining new operational licenses and permits. In the meantime, regulatory developments have loosened requirements and encouraged growth for business expansions in Vietnam. Lower bank interest rates, led by the State Bank of Vietnam, are helping to "heat up" the real estate market and the Prime Minister's Power Development VIII sets high targets for the energy transition. Further, in late 2023, Vietnam strengthened business ties with the top 3 economies with comprehensive strategic partnerships with the U.S. and Japan and boosted ties with China. Vietnam expects to attract more investment from these as well as other countries in a range of sectors from Real Estate and energy to Health Care and for various issues such as climate change mitigation under the Just Energy Partnership Agreement. |
Global M&A Trends Report
Vietnam
(Asia Pacific) Firm Tilleke & GibbinsContributors Tram Ngoc Bich Nguyen
Updated 30 Jan 2024Three things top of mind for private M&A practitioners in Vietnam are:
- Commercial: valuation expectation gaps
- Legal/general: transaction structuring
- Regulatory: antitrust
Vietnamese sellers have not quite adjusted to the new normal and are still demanding high prices when buyers have less capital to invest due to higher interest rates in foreign markets. This is especially difficult when sellers see Vietnamese unicorns listing on overseas markets at jaw-dropping valuations in recent memory. Transaction structuring is always a key issue in Vietnam, especially structuring to stay "local" when foreign investment requirements would debilitate the business or minimize capital gains tax for the sellers. Antitrust is an emerging issue as investors grow their profitable Vietnamese businesses and expand into other areas because the reportable thresholds triggering antitrust reviews are low compared to other jurisdictions.
Most private M&A deal activity is categorized as mid-market.
Most private M&A deal activity is seen in the Manufacturing sector.
Private M&A deal volume in 2024 is predicted to be greater than 2023 deal activity. Increasingly, businesses are relocating from China to Vietnam. More and more investors are looking seriously at Vietnam for long-term strategic partnerships. In some cases, foreign investors see M&A as a faster way to enter the Vietnamese market than the normal business establishment process, not least because it avoids the hassle of obtaining new operational licenses and permits. For example, Japan's SMBC acquired 15% of VP Bank with deal value of USD1.5 billion.
In addition, recent regulatory changes in Vietnam, including Decree 08 for Corporate Bonds and Circular 10 for Onshore Bank Loans, have relaxed requirements and fostered business expansion. The State Bank of Vietnam's reduction in bank interest rates is fueling growth in the real estate sector, while the ambitious goals set by the Prime Minister's Power Development VIII signal a strong commitment to energy transition. Additionally, Vietnam's strengthened business partnerships with the U.S., Japan, and China in late 2023 are expected to attract increased investment across various sectors, including Real Estate, Energy, Health Care, Consumer Goods and Industrial Manufacturing.
Valuation expectation gaps are not an issue for acquisitions of publicly listed companies, because both sides use similar calculation metrics. Foreign investment restrictions are less of an issue for publicly listed companies, which tend to be parent companies of a corporate group and have business lines open for foreign investment. However, issues such as compliance with ESG requirements, and transaction structuring around the public tender offer requirements are more pressing for M&A practitioners.
Public M&A deal activity is categorized as top-tier as publicly listed companies tend to be much larger.
Most public M&A deal activity is seen in the Real Estate and Energy sectors. Recent regulatory developments have loosened requirements and clarified uncertainty in these sectors.
Public M&A deal volume in 2024 is predicted to be greater than 2023 deal activity. We do not expect significant differences in the drivers mentioned for private M&A above.
Foreign investors see M&A as a faster way to enter the Vietnamese market than the normal business establishment process, not least because it avoids the hassle of obtaining new operational licenses and permits. In the meantime, regulatory developments have loosened requirements and encouraged growth for business expansions in Vietnam. Lower bank interest rates, led by the State Bank of Vietnam, are helping to "heat up" the real estate market and the Prime Minister's Power Development VIII sets high targets for the energy transition. Further, in late 2023, Vietnam strengthened business ties with the top 3 economies with comprehensive strategic partnerships with the U.S. and Japan and boosted ties with China. Vietnam expects to attract more investment from these as well as other countries in a range of sectors from Real Estate and energy to Health Care and for various issues such as climate change mitigation under the Just Energy Partnership Agreement.