M&A 2016: Opportunities and challlenges in a more liberal context
During the first session of Vietnam M&A Forum 2016, experts speculated that domestic M&A landscape this year will open up new window of opportunities thanks to increasing liberal context, despite potential challenges ahead.
According to Christopher Kummer, President of the Swiss Institute of Mergers, Acquisitions and Alliances (IMAA), Vietnam merger & acquisition market is leaping forward at phenomenal growth rates, compared to European decline of 1.3%, and lukewarmness situation in Asian markets such as China or Japan.
Kummer provides insightful statistics regarding Vietnam M&A market. Since 2013, Vietnam has risen by 3 million US dollars in terms of industry deals, partially thanks to the bustling activities of small-scaled transactions. However, deals are currently constrained amongst local companies who seek to grow their businesses up to a certain point where they can earn some profits. Most notably, Vietnam is now ranked the 15th most developed M&A market in the world.
John Ditty, M&A Director at KPMG Vietnam, said this industry in Vietnam has evolved tremendously with deals becoming not only greater in scale but also more sophisticated in terms of nature. Both sellers and acquisitors are now able to identify their objectives while making M&A deci sions. Most remarkably, some industries such as real estate and retailing in Vietnam have become a global supply chain after the country admission to regional and world trade agreements.
Nguyen Thi My Phuong, General Director at Tien Phuoc Real Estate Joint Stock Company, speculated that merger & acquisition activities will remain vigorous in real estate industry because Vietnamese property firms are now able to outspread their M&A foothold to overseas playgrounds.
However, there remain some concerns for Vietnam regarding legislative matters. For instance, according to Decree 60, it is now legitimate for foreign investors to wholly own a locally based business. Moreover, international firms enjoy greater advantages to gain profitable acquisition now that the law stipulates accelerated equitization and divestment. Japanese and Thai investors are eyeing some local industries such as pharmaceutical, agriculture, real estate, yet they are concerned about Vietnamese investment law. Overall market sentiment is positive when most investors propose the market is recovering well, though some uncertainties in the investment law are posing unwanted obstacles. Vietnamese M&A market will continue to thrive so long as the capital market recuperates. New favorable investment policies are expected to be passed for the time to come concerning pharmaceutical industry, when the government encourages investment flows from foreign-owned enterprises. This will open up new windows of opportunities for Vietnamese businesses because they will be able to learn from international know-how and technology.