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The M&A market in 2021 recorded many big deals of domestic investors.

Growth despite the pandemic

In 2021, despite the negative impact of the Covid-19 pandemic, foreign investment into Vietnam, including investment flows through M&A, still witnessed growth.

By the end of November 2021, the total newly registered investment capital, adjusted and contributed capital, shares bought buy foreign investors reached US$26.46 billion, up by 0.1% compared to the same period in 2020; in which, investment through capital contribution and share purchase reached nearly US$4.4 billion.

According to data from KPMG Vietnam (a professional service provider in Vietnam), in the first ten months of 2021, the M&A market has attracted more than US$8.8 billion, up by 17.9% compared to 2020 and by 13.7% compared to the year before the pandemic in 2019. Along with the development of the economy, the M&A market in Vietnam shows high stability, even strong growth in 2021.

Vietnam has also been making great efforts to overcome challenges and seize opportunities to become a stopover for a new wave of investment in the region when there is a tendency to re-shift global capital flows.

Warrick Cleine, Chairman and General Director of KPMG Vietnam and Cambodia, said that the M&A environment in Vietnam is quite attractive. M&A deals are very interesting, with deals worth hundreds of millions of USD. M&A has become an important part of Vietnam's economy. Many North Asian countries believe in Vietnam's growth potential, which is a very good sign.

However, investors tend to look to partners they can trust. Therefore, in an M&A deal, the more transparent an enterprise is, the more convenient it is for partners and investors in appraising, reviewing and valuing the business, avoiding potential risks, especially in terms of legal aspects.

Deputy Minister of Planning and Investment Tran Quoc Phuong said that as Vietnam's economy continues to grow thanks to the Government's supportive regulations and policies, entering 2022, there are still risks. In the context of Covid-19 and its impact on the macro-economy, the Vietnamese market is still expected to maintain a good growth momentum with many opportunities for domestic investors.

In the future, M&A will create many Vietnamese corporations with a scale comparable to large corporations in the region. During the Covid-19 period, domestic buyers have certain advantages in carrying out M&A deals. In addition, the legal corridor for investment and business activities is also constantly being improved. Many laws have been amended to remove difficulties and obstacles and create favorable and open conditions for these activities in 2022.

The rise of domestic investors

Notably, in the past two years, despite the impact of the Covid-19 pandemic, the situation in the M&A market has witnessed domestic enterprises demonstrating advantages of speed and flexibility to conduct new deals. Specifically, in 2018 only 18% of Vietnamese enterprises were buyers, but in the 2019 – 2020 period, it increased to 30% of the total transaction value; in which, 70% of M&A implementation in Vietnam and 30% in foreign countries. In the first ten months of 2021, there was US$1.6 billion made by domestic investors. In which, US$1.13 billion, with 11 deals done by five leading companies in Vietnam, such as Vingroup, Masan, NovaLand, Hoa Phat and Vinamilk. This shows that the rise of Vietnamese enterprises and that M&A is no longer exclusive to foreign enterprises.

Notable M&A deals in 2021 include Vinhomes Joint Stock Company announcing the purchase of Dai An urban area with a scale of 300 hectares in Hung Yen province, Nam Long Investment Joint Stock Company completed the acquisition of 100% of the project in Dong Nai from Keppel Land, and received the transfer of the Dong Nai Waterfront project.

Or other notable deals are Danh Khoi acquiring 100% of capital from a Japanese enterprise to become the investor of Sun Frontier Project (Da Nang), Truong Hai buying Vietnamese retail chain E-Mart, Becamex IDC and Central Retail Vietnam collaborate to develop GO! in Binh Duong.

Besides increasing the land fund to "wait for right opportunity", domestic enterprises are also turning to M&A in the industrial real estate segment with a series of notable deals. Savills Vietnam said Vietnam Industrial Park Group Joint Stock Company has acquired a land bank of 250 hectares with an investment of US$300 million and aims to develop factories and warehouses for lease in the high-end segment, with portfolio investment spread nationwide from Bac Giang, Hai Phong, Hai Duong to Dong Nai and Long An.

Another deal is Vingroup promoting its ownership of industrial real estate holding two industrial parks in Hai Phong, including Nam Trang Cat (200 ha) and Thuy Nguyen (319 ha). In particular, this group has also established Vinhomes IZ - a subsidiary in charge of industrial real estate.

However, according to Nguyen Thi Van Khanh, Senior Director of JLL Vietnam, acquisition or cooperation are two areas of M&A. Domestic enterprises can consider M&A a solution to improve internal resources and increase competitiveness.

However, M&A should not be seen as just an "asset collection game", but rather, it is important to create a topology. By participating in the value chain, Vietnamese enterprises can increase their strength and become a link in the global supply chain.