Headwinds in Vietnam M&As likely to attract strong investors

Merger and acquisition (M&A) activities in Vietnam continue to face headwinds but these market conditions are expected to bring new opportunities for passionate buyers in 2023, KPMG Vietnam partner Nguyen Cong Ai said Thursday.

The Vietnamese market saw the total value of M&As reach $5.7 billion in the first 10 months of 2022, down 35.3% year-on-year. Singapore was the leading country in cross-border transactions with about $1.2 billion, followed by the U.S. ($570 million) and South Korea ($370 million), according to KPMG data.

Like in 2021, transactions continued to be led by Vietnamese enterprises, with a value exceeding $1.3 billion, up 10% year-on-year. The main industries attracting investments included consumption ($1.2 billion), real estate (nearly $1 billion), and manufacturing ($800 million). In particular, the energy sector is becoming the hot spot in 2022 in terms of value growth, reaching almost $600 million, a six-fold increase compared to the entire 2021.

“Nonetheless, there were no billion-dollar M&A deals in 2022 so far, despite a rise in demand for financial services, consumption, and retail,” Ai told Thursday’s Hanoi press briefing on the Vietnam Mergers and Acquisitions Forum 2022 in Ho Chi Minh City on November 23.

The senior partner for deal advisory at KPMG Vietnam also cautioned that the entire market may remain the same next year and 2024.

According to the organizing committee, M&A activities in Vietnam have recently recovered positively. Capital flow from private equity funds are becoming the main driving force behind the accelerating market.

However, according to the latest report from Global Data, the third quarter of 2022 saw the lowest volume of global M&A activities, with the total value down 48% year-on-year.

Just over 8,250 M&A deals worth $544 billion were recorded globally, compared to around 9,600 worth $1.05 trillion recorded in the same quarter of 2021. Large-scale transactions have slowed, with M&A demand forecast to experience a recession next year.

In 2021, private equity funds invested more than $2 trillion globally, with trillions of U.S. dollars more in reserve to close new investments, according to the forum organizing committee.

In Vietnam, PE funds and venture capital still saw strong growth in the first months of this year, despite uncertainties in the capital market. In particular, Vietnam’s innovation startup ecosystem in 2022 is forecast to see a total investment of about $2 billion.

Editor-in-Chief of VIR and chairman of the committee Le Trong Minh said at the press briefing, “This year's prominent annual event on investment channels via M&A will delve into prospects and obstacles in M&A activities in Vietnam, as well as how to continue to lure capital flows from deep-pocketed investors. International funds, particularly PE and VC funds, are still seeking lucrative industries and companies to put cash into.”