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SOE equitisation, divestment of State capital help bolster M&A market

The equitisation of State-owned enterprises (SOEs) and divestment of State capital have created more products for the M&A market, heard the Vietnam M&A Forum in HCM City on August 6.

Experts said that means there are more opportunities for foreign investors to acquire stakes in SOEs.

Deputy Minister of Planning and Investment Vu Dai Thang said the value of M&A transactions over the past decade has come to about 55 billion USD, adding that free trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTT) and the EU-Vietnam Free Trade Agreement (EVFTA) will also help expanding the market, stimulate the investment flows and increase M&A activities.

The Vietnamese M&A market is estimated to be worth nearly 7.6 billion USD in 2019, led by foreign investors from Singapore, Thailand, the Republic of Korea and Japan, experts said.

However, participants at the forum also urged more improvements in the legal framework and law enforcement related to M&A, and the removal of the ownership cap for investors.

M&A activities in 2019 and beyond are forecast to continue focusing on consumer goods, retails and real estate. Besides, more transactions on a larger scale are expected in the fields of telecommunications, energy, infrastructure, pharmaceuticals, and education. 

Nguyen Anh Duc, standing deputy director general of the Saigon Co.op retailer giant, said the retail sector attracts investors thanks to the potential local market as Vietnam has a large and young population.

Meanwhile, a stable macro-economic growth, many bilateral and multilateral cooperation agreements, and high population growth and urbanization rates are factors that make Vietnam an attractive destination for real estate developers. 

In particular, big M&A transactions are expected in infrastructure and energy, as Vietnam has the policy of mobilizing capital from the private sector for infrastructure development.

Investors are also watching for opportunities in the telecom sector, considering the Government’s plan to restructure VNPT and equitise MobiFone.

At the same time, several large-scale pharmaceutical companies such as Duoc Hau Giang (DHG), Domesco and Traphaco are in the target range of foreign investors.