A housing project under construction (Photo: VNA)Hanoi (VNA) – Many big and surprising merger andacquisition (M&A) deals were made in 2016 with retail and real estatecontinuing to dominate this market.
A deal that has attracted much public attentionsince late 2016 is the purchase of 78.38 million shares of the Vietnam DairyProducts Joint Stock Company (Vinamilk) through the stock market. The buyer is Singaporeanfood and beverage firm Fraser & Neave (F&N), owned by Thai billionaireCharoen Sirivadhanabhakdi.
If it is successful, F&N will have to spendat least 11.3 trillion VND (over 500 million USD), raising its ownership inVinamilk from 11 percent to 16.4 percent.
In Q3, TCC Group of this Thai tycoon finishedbuying the entire wholesale network of Metro Cash & Carry Vietnam,including 19 centres and relevant real estate valued at 655 million EUR (848million USD).
Central Group, another Thai firm, also spent1.14 billion USD on acquiring all 32 supermarkets and trade centres of Big CVietnam from France’s Casino Group.
Another big M&A deal is Thai group Singha’sbecoming a strategic partner of Masan Group through buying 25 percent and 33percent of stakes in Masan Consumer Holdings and Masan Brewery, respectively,at 1.1 billion USD.
The purchase of Maximark by Vingroup, one of thelocal most dynamic, successful, well-capitalized companies in Viet Nam, withundisclosed value, is also considered a big deal, showing flourishing M&Asin the retail and consumer goods sectors.
Dang Xuan Minh, head of a research group of theannual Vietnam M&A Forum (MAF), said retail and consumer goods M&Aswith the aim of entering and expanding market was the most outstanding trend in2016.
The surging entrance of foreign retailers intoVietnam’s market and the opening of foreign-owned retail outlets throughM&As, especially by Thai companies, in the last three years have turned theretail sector into a prime example in the local M&A market, he noted.
That fact was attributable to the modestproportion (less than 30 percent) of modern retail channels such assupermarkets, hypermarkets, shopping centres and convenience stores inVietnam’s retail market, promoting this market’s attractiveness to foreigninvestors.
Tariffs on many goods will be removed as part ofcommitments in the ASEAN Economic Community with a population of over 600million. Meanwhile, the maturity of Thailand’s domestic retail industry alsoencouraged this country’s retailers to expand overseas business, particularlyin countries like Vietnam which has an almost 100-million-strong population,Minh added.
Even without multi-billion-dollar deals, realestate was still hot in the M&A market in 2016 with the participation ofinvestors from the Republic of Korea (RoK), Japan and Singapore.
Notably, the RoK’s Mirae Asset cooperated withAON BGN to spend 382 million USD on buying Keangnam Landmark 72 in Hanoi.Mapletree Investments, a Singaporean firm, declared that it acquired KumhoAsiana Plaza project in District 1, Ho Chi Minh City, at a cost of 215 millionUSD from the Rok joint venture of Kumho Industrial and Asiana Airlines. NewLife RE also purchased Duxton Hotel in District 1 at 49.2 million USD from LowKeng Huat.
Domestic enterprises were also busy in propertyM&As in 2016. While TNR Holdings invested 110 million USD in buying TNRTower Hanoi from Vingroup, Vietnam’s Muong Thanh Group said it now owns 95percent of shares at Cienco 5 Land after spending 1.5 trillion VND on thispurchase. Vietnamese Rang Dong Group also acquired a five-star resort complexin Binh Thuan province.
According to Stephen Wyatt, country head forVietnam of global real estate advisor JLL, many foreign investment funds toldJLL that they want to increase their presence in Vietnam through investmentcooperation or buying existing projects, particularly profitable ones.
Although there hasn’t been detailed statistics,the MAF research group believed total M&A value in 2016 broke the record of5.2 billion USD set in the previous year.
Chris Freund, CEO of the private equity firmMekong Capital, believed that M&As will keep vibrant in all fields,especially real estate, agriculture, consumer goods, retail and pharmaceuticals.All foreign clients that Mekong Capital has met are interested in those areas.
Sharing the same view, Alex Crane, GeneralManager at Cushman & Wakefield Vietnam, forecast retail M&As willcontinue booming in 2017, elaborating that many foreign businesses have yet toenter Vietnam’s retail market due to high office rental. Therefore, the bestsolution is M&A, usually through forming a joint venture with a Vietnameseenterprise.
Dang Xuan Minh, however, pointed out an array ofchallenges for M&A activities in 2017, including changes in the US’spolicies, the uncertain future of TPP, obstacles to the equitisation ofState-owned enterprises.
To have an M&A value comparable to that oflast year, the State must make strong moves to divest its stake in big groupsand corporations, he said.-VNA
VNA
