The value of mergers and acquisitions (M&A) in Vietnam is expected to reach $20 billion annually in the next three years as the country opens its economy up further, said Binh Le Vandekerckove, founder and CEO of ASART Deal Advisory Co.
Speaking at an annual M&A forum in Ho Chi Minh City on Tuesday, the CEO listed some of the drivers for the M&A market's growth, which include the Vietnamese government’s flexibility and the country’s deepening participation in free trade agreements (FTAs).
According to ASART data, after a stall in 2012, Vietnam’s M&A activity saw a boom in 2016-2018, with up to $16 billion poured into firms in the Southeast Asian country in 2016, including unannounced deals.
After peaking at $10.8 billion in 2021, the M&A market in Vietnam dwindled to $6.8 billion in 2022 and $4.4 billion in the first 10 months of this year, data at the forum showed.
She noted that environmental, social, and corporate governance (ESG) is becoming a determinant of future deals. “Currently, out of five potential deals, two require ESG,” the executive added.
She suggested the government build a clearer framework for M&A activities and target companies be better prepared to close deals faster as they normally take 12 months before being finalized in Vietnam.
Opportunities await
Warrick Cleine, chairman and CEO of KPMG in Vietnam and Cambodia, commented that drivers for Vietnam’s M&A market this year stem from robust foreign direct investment (FDI), stable politics, and FTAs.
Other driving factors include inflation being tamed at below 4%, strong GDP growth, and public debt controlled at below the regulatory 60% of GDP.
Sectors of interest will be green energy, technology, real estate, and health care, driven by the government’s green growth policy, digital transformation, changes in demographics, and demand for high-quality assets, according to Cleine.
Addressing the forum, Deputy Minister of Planning Tran Duy Dong outlined causes for lackluster M&A activities this year, mostly global economic and geopolitical uncertainties and turbulences. Competition for FDI is set to intensify next year as the Global Minimum Tax will be enacted in a number of countries, causing FDI to divert via M&As.
However, the deputy minister was upbeat that hardships will force domestic companies to reassess their strategies, restructure their operations, and focus on long-term and more sustainable practices.
Many businesses have opted for M&A as a way to change themselves for the better. Notably, Vietnamese firms have emerged as buyers of domestic peers and even foreign partners to complete their ecosystems, Dong said.
The deputy minister boasted that Vietnam is preparing conditions to accommodate a shift of global supply chains and house the interest of multinational companies in forming ecosystems to manufacture chips, semiconductors, airplane spare parts, and innovative sectors.
Foreign players still see Vietnam’s investment environment in general and M&A market in particular as attractive thanks to its stable politics, impressive economic growth, and expanding domestic consumption, he added.