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Investment Banking is a financial intermediary providing related services. The IB performer will stand between companies, enterprises, governments, or securities issuers… and investors to advise and support M&A deals (mergers and acquisitions), IPOs (initial public offerings), restructuring, and capital arrangement for enterprises. |
A few years ago, IB seemed to become the promised land of financial institutions in Vietnam – the investment banking division of securities companies. Since 2018, the concept of IB has become more familiar with many prominent deals taking place. The investment demand of foreign investors is huge, followed by a rush of foreign capital inflows into the country.
But this promised land suddenly became barren due to various reasons. Since the COVID-19 pandemic in 2021, lasting through 2022 and 2023, the M&A market has stagnated. The bond market was also heavily impacted by the shock in the stock and corporate bond markets in the last months of 2022-2023, creating a bottleneck for enterprises’ capital mobilization channel.
However, after a quiet period in the first half of 2024, the market is showing positive signs, with the appearance of large M&A deals worth from tens of millions of USD to a few hundred millions of USD. IB performers thus believe that this market remains promising, as stated by Mr. Nguyen Van Quang, Head of Investment Banking at NH Vietnam Securities JSC (NHSV).
Upgrading the stock market successfully can make the IB market vibrant again
“The IB market in Vietnam is still considered a market with great potential, especially in the field of real estate, as there is significant selling pressure for restructuring bond loans that have matured or are about to mature. However, due to the impact of the global financial market, the number of M&A deals in the first half of 2024 remained quite quiet” – quoted Mr. Quang.
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Mr. Nguyen Van Quang shared that M&A in Vietnam has faced consecutive difficulties, with only a few deals concluded since the beginning of the year. Some large banks have also had to postpone plans to issue private offers to strategic partners.
However, he believes that the potential of this market will improve if Vietnam successfully upgrades its stock market in the last months of 2024. Therefore, investment funds also consider this a positive market and prioritize it for the long term.
“Upgrading the stock market will help Vietnam meet the criteria for investment by many funds and investors. This will allow investment funds and foreign investors to increase their investment portfolio ratio in Vietnam, thereby promoting the IB activities of securities companies” – he continued. From here, he expects not only M&A but also IPO, listing, and issuance activities to become more vibrant, contributing to positive revenue and profits for securities companies such as NHSV.
In addition, regarding IB practices in the current volatile market, Mr. Quang also stated that securities companies need to have a strict risk control process.
“In terms of risk management, NHSV carefully screens and evaluates customers and thoroughly understands the regulations and laws related to its advisory activities to comply absolutely with the regulations related to this field. For activities that are not our forte, NHSV will partner with leading consulting firms to jointly support the deal”
“With the orientation that IB remains the core segment in the strategy for the next five years, NHSV will continue to recruit and build a team of personnel to seize the opportunity when Vietnam is upgraded”
The ESG trend requires businesses to act quickly
As the goal of sustainable development is gradually becoming a global standard, international investment funds are interested in the ESG factor before making investment decisions. According to Mr. Quang, Vietnamese enterprises need to be encouraged to comply if they do not want to be left behind.
“Developed countries have erected carbon emission barriers, which will officially take effect from January 1, 2026, to urge other countries, including Vietnam, to reduce emissions. Thus, from January 1, 2025, Vietnam wants to export agricultural products must prove that these goods do not come from deforestation after December 31, 2024. In addition, there are issues such as building carbon borders, forests, plastics in manufacturing companies…
To avoid being left behind, Vietnam needs to encourage enterprises to implement the ESG (environmental, social, and governance) standards to enhance their reputation and meet the conditions for tariff barriers in markets that require “greenness” such as the EU and the US…
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