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Investment Banking (IB) is a financial intermediary institution that provides related services. The IB unit acts as an intermediary between companies, businesses, governments, or securities-issuing organizations and investors to provide consulting and support for M&A (mergers and acquisitions), IPOs (initial public offerings), restructuring, and corporate financing. |
In our conversation, Mr. Tran Nhat Huy, Director of the IB Division at SSV – also one of the strongest units in IB operations in Vietnam – shared valuable insights about the strengths and weaknesses of the market and its potential for the future.
Huge Potential
What are your thoughts on the potential of the IB market in Vietnam?
Mr. Tran Nhat Huy: The Vietnamese IB market is indeed full of “potential.” This means there is a lot of room for growth, but whether this potential can be unlocked and developed into something substantial remains a big question. Most recently, the market was heavily impacted by the shockwave that hit the stock and corporate bond markets from late 2022 to the first half of 2023.
However, since the second half of 2023, the IB market has started to show signs of recovery. Firstly, the corporate bond market is gradually recovering and being restructured. Secondly, after a period of stagnation following the COVID-19 pandemic, the M&A market has begun to recover from the beginning of 2024, with several large M&A deals worth tens of millions of USD to hundreds of millions of USD, such as Capital Land (Singapore) acquiring 19 hectares in the new city of Binh Duong from Becamex (BCM) for over 5,000 billion VND…
In addition, the government has committed to its plan for equitization and state capital divestment, providing good and quality goods (stocks) to the market.
The story of market upgrade has always been hot in recent years. How will the IB segment of securities companies benefit if the market is upgraded?
– Upgrading the stock market will immediately attract foreign investors and bring in tens of billions of USD into Vietnam. This will positively impact the IB market, especially in finding good and quality goods (including stocks, bonds, fund certificates, M&A deals…) to absorb this new investment capital.
This will be very beneficial for securities companies, especially those with foreign origins and global systems like SSV. Their strengths include a wide network, strong financial resources, and a large system of foreign partners and investors worldwide. Thus, these securities companies will have many advantages in connecting foreign investment demands with the needs of Vietnamese businesses and partners.
As a result, securities companies will have more opportunities to increase revenue and profits in the IB segment by leveraging these advantages.
M&A and IPO will gradually improve
What are your thoughts on the M&A market’s development trend in Vietnam in the coming time? What strategies is SSV employing to seize the opportunities in this market?
– The Vietnamese M&A market was significantly impacted and stagnated during the COVID-19 period (from 2021 to the end of 2023) for various reasons. However, since the beginning of 2024, the market has shown positive signs of recovery.
Regarding M&A in Vietnam, it’s essential to mention real estate M&A deals. Vietnamese real estate businesses have faced challenges with their operations and cash flow, and the need for project restructuring and transferring a portion of their owned projects to generate immediate operating cash flow is relatively high. Foreign real estate companies from Japan, Singapore, and South Korea are actively seeking and acquiring projects with complete legal procedures from Vietnamese enterprises. Many deals have been, are being, and will be made in the coming time.
Another M&A segment that is considered relatively potential in the coming time is the transfer and sale of shares in energy projects (including hydropower, thermal power, wind power, and solar power). This field has always been of particular interest to foreign investors in Vietnam.
SSV, with its core differentiator of foreign origin and global system, possesses many advantages in this wave, connecting foreign investors with the needs of Vietnamese businesses and partners. Another fundamental difference is the One Shinhan ecosystem, including banking, finance, insurance, and technology. This ecosystem allows SSV to connect with businesses to create M&A deals and increase revenue and profits in this segment.
What about IPO activities, sir?
– It is expected that when the Vietnamese stock market is upgraded, there will be a demand for high-quality goods. Therefore, listing and IPO activities are likely to become vibrant again. However, the level of activity will depend largely on whether the equitization and state capital divestment in the coming time will follow the planned roadmap.
The consulting role in listing and issuing is very important not only for IB activities but also for the overall operations of securities companies. Through this function, companies like SSV can expand both their retail (brokerage) and wholesale (IB) client bases, attracting new investors to open securities trading accounts, maintaining the maximum number of active and trading accounts on their platforms… This, in turn, can expand margin lending, brokerage activities, and IB operations.
Businesses Need to Focus on ESG and Conduct IR Properly
How is the ESG trend affecting the IB market? Based on your experience, can you share the approach businesses should take towards ESG and what they need to do to attract investment capital?
– ESG has become one of the decisive investment criteria for investors when evaluating a company’s operations. The ESG trend will positively and healthily impact the IB market, as investors and the market can choose stable, sustainable, and healthy businesses that meet their investment criteria.
This also means that only good companies with truly quality goods for the stock market will attract investors’ attention and transactions.
In light of this trend, businesses need to develop a sustainable development roadmap and meet the E (Environment), S (Social), and G (Governance) criteria of the ESG standards. To fulfill all these criteria, companies should collaborate with professional consulting firms to establish, perfect, and maintain these criteria continuously.
In reality, the values from the ESG criteria are honestly reflected in the company’s operating results, image, actual value, and stock price.
How does the IR activity of enterprises contribute to the results obtained from IPO, listing, and share offering transactions…?
– Enterprises that have or plan to list are investing resources in developing their IR activities. Almost every enterprise has a professional IR department to maintain relationships with shareholders and investors.
Through their IR teams, companies have built a professional image and conveyed their core values and unique strengths that contribute to their reputation. All of these factors have significantly contributed to the success of enterprises’ IPO, listing, and share offering transactions in the past time.
Could you please share where SSV will stand in the Vietnamese IB market in the next five years?
– SSV is confident in being the number one in the IB segment among Korean securities companies operating in Vietnam (including 8 companies).
IB is currently one of the two main pillars of SSV’s business operations. We always take on the role of the main consultant and arranger for transactions, affirming our reputation, quality, and role as a key partner for Vietnamese enterprises and co-investors. Our IB client portfolio includes companies in the top 5 of each business field.
In terms of strategy, SSV focuses on specific products that not every securities company can provide. These products are tailored to each enterprise’s needs and realities and are customized to fit the characteristics of each business. On the other hand, as a foreign securities company, SSV is concentrating on providing IB services to large Korean FDI enterprises out of the 10,000 Korean businesses operating in Vietnam.
Thank you very much, sir.
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