Expecting the return of foreign M&A capital flows

The Vietnamese M&A market is still quite active, but the main driving force is coming from domestic investors. Expectations are that foreign capital will return in the near future.

Vietnam is still considered by foreign investors as a safe, attractive market with a lot of potential.

The calm between the waves

The Vietnamese M&A market is experiencing certain lulls, as the total value of M&A transactions has slowed down in recent years. In the first 9 months of 2023, according to KPMG data, the total value of M&A transactions reached about 3.2 billion USD. In which, the main driving force lies in domestic investors.

According to a report from the Foreign Investment Agency (Ministry of Planning and Investment), in the past 10 months, there were 2,669 capital contribution and share purchase transactions by foreign investors, with a total capital contribution value of more than 3.68 billion USD, a decrease of 10.4% in number of transactions and a decrease of 29% in value compared to the same period. This trend started in the last 2-3 years and this has made the Vietnamese M&A market more quiet, with fewer large deals by foreign investors.

However, these are still quite positive numbers in the general gloomy context of the Southeast Asian M&A market. Many deals from foreign investors have also been recorded. Among them, one of the most mentioned deals is the deal of Singapore's large medical group - Thomson acquiring Vietnam's FV Hospital for 381.4 million USD in early 2024.

In addition, Mitsui & Co. invested to officially become a strategic shareholder of Tasco Auto - a member unit of Tasco; Nishi Nippon Railroad (Japan) acquired 25% of shares in the 45.5-hectare Paragon Dai Phuoc Project from Nam Long Group (NLG) for about 26 million USD; Kim Oanh Group (Vietnam) cooperated with NTT Urban Development, Sumitomo Forestry, Kumagai Gumi Co Ltd (Japan) to develop The One World Project, a 50-hectare residential area in Binh Duong province.

Similarly, Tripod Technology Corporation (Taiwan) acquired an 18-hectare industrial land plot in Ba Ria-Vung Tau from industrial real estate developer Sonadezi Chau Duc (SZC). Atlantic, Gulf and Pacific LNG (Singapore) acquired a 49% stake in Cai Mep LNG Terminal in Ba Ria-Vung Tau province…

Commenting on this trend, Deputy Minister of Planning and Investment Nguyen Duc Tam said that this is only a temporary issue, due to the general trend of the global market, because the world economy has not yet fully recovered after the Covid-19 pandemic and global geopolitical fluctuations.

“Vietnam in general, and the M&A market in particular, are still considered by foreign investors to be a safe, attractive, and potential market,” Deputy Minister Nguyen Duc Tam emphasized, adding that in the context of a clearly recovering economy and strong foreign investment flows into Vietnam, the Vietnamese M&A market will soon become vibrant again.

Expectations of foreign capital flow

After a considerable period of time when the Vietnamese M&A market was dominated by domestic investors, expectations are now being placed on foreign investors. In its report on the Vietnamese M&A market, KPMG said that foreign investors – mainly from Japan, South Korea, Singapore and the US – who have led M&A activities in Vietnam, are expected to return from 2025 and the following years.

There are many reasons for KPMG to make this assessment. For example, the recovery of the macro economy, preferential policies, and the improvement of infrastructure have continued to position Vietnam as an attractive market for cross-border capital flows. According to KPMG, the Vietnamese M&A market in the last months of 2024 and 2025 is expected to be increasingly promising for investors looking for opportunities amid regional fluctuations.

“The M&A market will be bustling again, based on the fact that many investors want to return to traditional sectors, profitable businesses, stable cash flow, and clear advantages for each business segment,” said Mr. Dinh The Anh, Executive Member, Head of Corporate Finance Consulting at KPMG Vietnam.

The return of foreign investors to the Vietnamese M&A market may have to start with the strong growth of foreign investment flows into Vietnam in recent years, despite the fact that global investment flows have yet to recover.

The target is that this year, Vietnam will attract 39-40 billion USD in foreign investment capital, equivalent to last year. Whether this figure can be achieved or not depends on the year-end moves of investors, but certainly, the quality of foreign investment flows into Vietnam has improved significantly.

Many large projects in high-tech fields, including semiconductors, have been and continue to pour into Vietnam. One specific example is that LG Display recently increased its capital by 1 billion USD for its new-generation screen factory in Hai Phong, right after Samsung Display announced its plan to invest another 1.8 billion USD in its factory in Bac Ninh. Meanwhile, a series of big names such as Goertek, Foxconn, Luxshare... are still continuing to pour capital into Vietnam.

More importantly, many foreign investors in the fields of semiconductors and AI are "looking forward" to plans to boost investment and business activities in the Vietnamese market, such as Marvell, Lam Research, Synopsys, Infineon, HanaMicron, Amkor...

Vietnam also has many ambitions in developing this industry, which, according to the affirmation of Minister of Planning and Investment Nguyen Chi Dung, is not only to participate in the global value chain, but also to aim at building an advanced and attractive semiconductor industrial ecosystem in the region and the world, helping Vietnam to be self-reliant and develop sustainably in this field.

As foreign investment in Vietnam becomes more active, the M&A market will also become bustling again.

“Vietnam is well positioned to assert its position in the global semiconductor supply chain from integrated circuit design, assembly, testing to packaging,” said KC Ang, Chairman of SEMI’s Southeast Asia Advisory Council and President of Global Foundries Asia, affirming that Vietnam has the potential to become a dynamic innovation hub and play an important role in the global semiconductor supply chain.

Source: https://baodautu.vn/ky-vong-su-tro-lai-cua-dong-von-ma-ngoai-d230985.html