Amidst the challenging environment, strategic investors from the likes of Thailand, Singapore, Japan, and South Korea continue to dominate merger and acquisition transactions in Vietnam.

Singapore’s Sembcorp Industries through its wholly owned subsidiary, Sembcorp Solar Vietnam, earlier this month acquired majority interests ranging 73-100 per cent in various subsidiaries of Gelex Group JSC.

In October, Thailand’s Ratch Group bought a 51 per cent stake in the 29.7MW Ecowin wind power project in the Mekong Delta province of Ben Tre.

Vo Ha Duyen, chairperson of Vilaf, said, “Thai and Singaporean investors have played a significant role in Vietnam’s merger and acquisition (M&A) landscape, with positions being only slightly changed from year to year in response to market dynamics. While they temporarily dropped out of the top 5 in 2021, both groups have re-emerged among the leading investors since 2022.”

In the transactions Vilaf has been advising for the last two years, Thai and Singapore banks have been broadening their horizons out of the home countries, expressing a strong interest in financial services M&A transactions in Vietnam.

According to Bloomberg, multiple Thai banks, including SCB X and Kasikornbank, are exploring opportunities related to the estimated $00 million Home Credit asset, while UOB in February completed the acquisition of Citi’s retail banking business.

“Thai investors have established a robust presence in Vietnam, participating in significant M&A deals spanning diverse sectors such as industrial, retail, energy, and consumer goods. Notable Thai corporate groups like SCG, B. Grimm Power, Super Energy, ThaiBev, and Central Group have left a substantial footprint in Vietnam over the years through such activities,” Duyen noted.

In contrast, Singaporean investors have played a prominent role in M&A activities in the real estate and healthcare sectors. Thomson Medical Group’s recent acquisition of FV Hospital from Quadria Capital was Vietnam’s largest deal in the sector to date.

Meanwhile, real estate has emerged as the focal point of M&A transactions in 2023, commanding the highest activity levels in terms of value among all sectors, with Singaporean buyers ranked among the top three.

“From Singapore, Keppel Land, CapitaLand, and Frasers Property have been instrumental in shaping cross-border real estate M&A activities this year with the more prominent deals,” Duyen added.

Masataka “Sam” Yoshida, head of the Cross-border Division of RECOF Corporation, told VIR that Japanese investors had been more cautious than their counterparts in the region in recent years and that many discussions regarding potential M&A transactions had been either suspended or dropped.

“Japanese investors are still grappling with the challenge of recovering the gap created during that time vis-à-vis its competitors from South Korea and, to a certain extent, Singapore and Thailand as well. The recent depreciation of the yen is also a hindrance when they consider major investments outside Japan,” Yoshida said.

Despite these challenges, Japanese companies remain focused on strategic investments, he added.

“Fuelled by a substantial cash position, their interests remain resilient and unwavering, particularly in burgeoning markets such as Vietnam. Throughout the current year, we have observed a spectrum of transactions from Japan into Vietnam across diverse sectors, ranging from healthcare and renewable energy to manufacturing, financial services, education, food and food distribution and packaging,” said Yoshida.

Since the early part of this year, RECOF has been assisting Japanese buyers in advanced stages of negotiation. Their focus spans the manufacturing and logistics sectors, with well-defined strategies aimed at accelerating growth in the Vietnamese market or expanding their Vietnamese operation into the regional production hub.

With regards to South Korean M&A deals in Vietnam, Samuel Son-Tung Vu, partner at law firm Bae, Kim & Lee Vietnam, said the South Korean economy has been significantly impacted by a stagnant global market. As the result, many South Korean investors have been very cautious about oversea expansion.

“A few South Korean investors, which already have a strong foothold in Vietnam, may expand their business operation verticals. For instance, after the success of KEB Hana Bank’s investment in BIDV several years ago, Hana Investment & Securities (a KEB affiliate) also made a strategic investment in BIDV affiliate BSC,” Vu said.

“During the pandemic period, interest rates in South Korea were relatively low. However, due to the interest rate hike by the US Federal Reserve, such rates have also become a huge burden for South Korean investors to expand oversea,” he added.

Vietnam Investment Review