Vietnam’s merger and acquisition (M&A) market is considered the least affected among the Southeast Asian countries since the onset of the COVID-19 pandemic, but in the new normal state, M&A value is expected to fall substantially to just 3.5 billion USD in 2020.

 

This number is only 48.6 percent of 2019’s value of 7.2 billion USD.

 

The pandemic continues to rage and has enormous impact on the global market, taking its toll on the global M&A market.

 

Data by MergerMarket showed both deal volume and value declined in the first half of this year, with 6,938 deals worth 901.6 million USD, down 32 percent in volume and 53 percent in value year-on-year.

 

Speaking at the press meeting on November 5 to introduce the M&A Vietnam Forum 2020, Le Trong Minh, editor-in-chief of Dau Tu (Investment) newspaper and head of the organising committee, said Vietnam’s M&A market is entering a new stage – the new normal – which can see new opportunities.

 

After more than a decade of strong growth with thousands of transactions and total value of nearly 50 billion USD, M&A activities have proven an efficient channel of raising capital, contributing to Vietnam’s economic restructuring and State-owned enterprises equitisation process.

 

However, Vietnam is emerging as a safe and attractive investment destination after successfully controlling the COVID-19 pandemic and many opportunities open up, Minh said, emphasising the possible movements of capital out of big but unsafe markets.

 

The M&A wave will be delayed as buyers and sellers cannot meet due to the pandemic, making the deal take longer than expected. Meanwhile, domestic enterprises are trying to find ways to adapt and change business-investment strategies, Minh said.

 

According to Dang Xuan Minh, chairman of AVM Vietnam, the COVID-19 pandemic and the new normal have driven investors and businesses to adjust their strategies, and increase restructuring activities.

 

Market insiders predicted M&A value in Vietnam may reach 3-4 billion USD this year but he said the number could be higher if one or two high-value deals are inked.

 

Data by AVM showed M&A activities are vigorous in the fields of real estate, finance-banking, industry, retail, logistics, agriculture and medical services. Foreign investors have also dominated the market with companies coming from Japan, Republic of Korea, Thailand and Singapore.

 

However, Vietnamese companies are actively participating in the market as buyers. In 2018, only 18 per cent of deals were bought by Vietnamese firms while this rate during 2019-20 nearly doubled to 33 per cent.

 

Investors and businesses in Vietnam still believe in the resilience of the M&A market in the post-pandemic period. According to CMAC Academy’s forecast, the market could see a V-shaped recovery in 2021-22 with value reaching 4.5-5 billion USD next year and 7 billion USD by 2022.

 

With the theme “Upsurging in the new normal”, M&A Vietnam Forum 2020, taking place on November 24 in HCM City, is expected to attract 500 representatives of domestic and international business and investment funds, who decide and make up 85 per cent of the value of the deals taking place in Vietnam./.

 

VNA