Vietnam’s M&A market shows signs of recovery amid evolving regulations

The 2024 Vietnam M&A Forum, themed “A Blossoming Market,” took place on November 27 in Ho Chi Minh City, drawing representatives from a range of international organisations. The forum served as a platform for discussing recent macroeconomic trends, policy shifts, global influences on Vietnam’s merger and acquisition (M&A) landscape, and the dynamics of international capital flows against a backdrop of evolving economic conditions and newly established regulations concerning foreign ownership and tax incentives.

Dinh The Anh, a partner and head of corporate finance at KPMG Vietnam, highlighted a notable downturn in the M&A market over the past two years but pointed to emerging signs of recovery. He reported a resurgence of buyer activity and the return of foreign capital into the Vietnamese market. “The M&A market will witness more dynamism in the near future, with several deals poised for completion. Investors from South Korea and Japan, who had taken a step back, are now re-engaging with confidence,” he stated, noting specific interest in the education sector—from early childhood education to university training—as a highly attractive area for investment.

Vo Ha Duyen, chairwoman of VILAF law firm, reinforced The Anh’s views by discussing the positive legislative reforms that have enhanced the appeal of Vietnam’s M&A market. She attributed part of this revitalisation to efforts aimed at streamlining administrative procedures and fostering digital transformation. Duyen specifically noted the relaxed foreign ownership regulations, which now allow up to 100 per cent ownership in burgeoning sectors such as e-services and gaming, facilitating easier access for foreign investors.

Nevertheless, she urged caution regarding the ongoing legislative processes, as many policies remain in draft form or under review, potentially impacting the timing and execution of future transactions. Duyen projected that by 2025, sectors such as logistics, manufacturing, technology, and finance would witness a surge in M&A activity.

Lee Leong Seng, head of property development and residential at Keppel, one of the leading global real estate operators, emphasised the importance of collaborations between international firms and local partners. He asserted that the current economic climate presents an optimal opportunity for foreign companies to collaborate with Vietnamese firms to generate high-quality real estate developments. Seng expressed confidence that the combination of international investment and local insights would be mutually beneficial for both sectors.

Voicing optimism about the evolving investment environment, Seng projected that the positive changes would enhance foreign investor confidence and create new avenues for growth in both traditional and emerging industries. He anticipated significant momentum in the real estate sector M&A activities leading up to 2025.

Conversely, Tamotsu Majima, senior director at RECOF Corporation, presented a perspective focused on the challenges facing Japanese firms engaged in M&A activities. He cited discrepancies in valuations between buyers and sellers as a critical barrier, noting that sellers often hold unrealistic expectations based on past performance, while buyers evaluate based on recent reports which may indicate lower valuation thresholds. Despite these obstacles, he too expressed a bullish outlook on Vietnam’s market potential, citing its robust GDP growth compared to Japan’s stagnation. Majima anticipated that Japanese companies would increase their investments in Vietnam, particularly as pressures to utilise available cash reserves mount and the government introduces reforms to promote outbound investment.

With expectations for heightened transactional activity in consumer goods, manufacturing, and service sectors by 2025, the conversations at the forum underscore Vietnam’s strategic importance as a burgeoning landscape for M&A, shaped by both domestic reforms and international investment interests.

Source: Noah Wire Services