Vietnam M&A forecast for a busy year: PwC

Technology, media, telecoms, industrial manufacturing, automotive, financial services, energy, consumer markets, and health are forecast to offer opportunities for mergers and acquisitions (M&A) in Vietnam this year, a new PwC report said.

Global M&A activities will likely rise in the second half of 2023 as investors and executives look to balance short-term risks with their long-term business transformation strategies, according to PwC’s “2023 Global M&A Industry Trends Outlook” study released on Thursday.

As for Vietnam, one of the world’s fastest-expanding economies, the global corporate services corporation mentioned these sectors as those likely to be busy with deals.

In technology, media and telecommunications, the report said digitalization for many businesses remains a key focus. Therefore, software deals will continue to dominate the sector, the report said. Telecoms, the metaverse, and video games will likely be hot spots.

For car and industrial manufacturing, portfolio optimization will drive divestitures and acquisitions, particularly those focused on sustainability and accelerating digital transformation.

In financial services, disruption from platforms and fintech is driving rapid technological changes and will boost M&As as players seek to acquire digital capabilities.

Regarding energy, utilities and resources, energy transition will remain a priority for investors and management teams, directing large volumes of capital to M&A and other capital project developments.

The study said while challenges remain in consumer markets this year, portfolio reviews and a focus on transformational transactions will create M&A opportunities in Vietnam.

Meanwhile, in the health sector, the need to innovate and transform businesses to achieve growth goals will drive M&A activity in 2023. The study noted that biotech, medtech, consumer-facing healthcare, and digital health solutions are expected to attract strong investor interest.

“With transformation and transactions at the center of CEOs' value creation plans, 2023 is expected to be an exciting year for M&A worldwide. In Vietnam, we continue to see interest from investors in the renewable, healthcare, logistics, and education sectors, as they broaden their manufacturing facilities, expand market share and tap onto an educated workforce and growing consumer base,” said Ong Tiong Hooi, partner of transaction services, PwC Vietnam.

“However, these local companies now have to start incorporating ESG [environmental, social, and governance] into their business plans as investors start to place priority on these initiatives in their investment agenda,” he said.

According to the PwC study, macroeconomic and geopolitical volatility will impact market players differently across the world this year.

Private equity firms will be looking at new deals and will be focused on creating value in their portfolio companies, which in turn will involve optimization and divestitures.

Meanwhile, credit funds will gain M&A shares from banks and become key to providing much-needed liquidity, particularly in mid-market deals.

For their part, venture capital firms may retreat from some riskier investments, but climate tech investing remains a potential bright spot, with more than one-quarter of all venture capital funding now going to climate technologies, especially those focused on cutting emissions, PwC said.

Ong added, “In recent months, we’ve been seeing many deals emerge recently including roll-ups in fragmented markets to build scale, strategic divestments from selected Vietnamese groups as they seek to balance out their cash flows for upcoming bond redemptions, carve-outs for large family businesses relevant to wealth transfer events, transacting as a catalyst to transform and innovate, and partial trade-sales and stakes to fund strategic expansions, particularly within Southeast Asia.”