Vietnam holds high potential for Japanese investors despite the various challenges they may face, said Masataka Yoshida, head of the cross-border division at consultancy RECOF Corporation and CEO of RECOF Vietnam.
Many Asian investors are coming to Vietnam, but businesses from the U.S. and Europe remain few, Yoshida told the Vietnam M&A Forum 2023 held on Tuesday in Ho Chi Minh City.
However, he noted that the prolonged time to complete M&A transactions and the high valuation expectations of sellers (often local enterprises) are issues for Japanese investors.
"Deals between Japanese companies are completed in about three months. It takes an average of six months between Japanese companies and European partners. However, the average time between Japanese and Vietnamese enterprises is 12 months," said Yoshida.
The Vietnamese M&A sector still has a lot of room for Japanese corporations to enter. Consumer-related areas such as retail, food production and processing, shipping and storage services, and fintech have the most potential, he added.
Three biggest M&A deals this year
In the first 10 months of 2023, Vietnam's M&A market saw 265 transactions worth more than $4.4 billion, a 23% decrease from the same time last year. The average transaction value was $54.5 million, which demonstrates the shift in investor focus to strategic initiatives requiring greater profit potential, according to Warrick Cleine, chairman and CEO of KPMG in Vietnam and Cambodia.
He told told the event the general trend of Vietnam's M&A market continues to grow, and M&A plays an important role in the strategies of many large corporations.
Regarding the largest M&A transaction in the history of the Vietnamese banking sector and market in 2023, VPBank recently announced the conclusion of a 15% private placement transaction for Japan's Sumitomo Mitsui Banking Corporation with a value of more than $1.5 billion.
The second largest deal is an industrial real estate M&A transaction in which ESR Group paid $450 million for a strategic stake at BW Industrial Development JSC.
Third is a medical M&A deal under which Thomson Medical Group (Singapore) agreed to buy a controlling stake in the Franco-Vietnamese hospital for more than $381 million.