The M&A Market Heats Up

A Wave of High-Profile M&A Deals

After a rather dull first half of the year, Vietnam’s M&A market has witnessed a remarkable rebound since August, with a string of notable deals being finalized and announced by businesses.

One of the most anticipated deals is the partnership between Mitsui and Tasco Auto, which is expected to be one of the biggest M&A “blockbusters” of the year. The investment by Mitsui & Co to become a strategic shareholder in Tasco Auto, a subsidiary of Tasco, has caught the attention of observers and investors alike. While the financial details of the deal remain undisclosed, it is believed to be a significant boost to the information technology and transportation sectors.

In addition to this headline-grabbing deal, a series of successful real estate M&A transactions have further energized Vietnam’s M&A market. For instance, Kido Group Joint Stock Company announced that it had completed a transaction to increase its ownership in Hung Vuong Joint Stock Company to 58.05% of the charter capital, thereby making Hung Vuong its subsidiary.

Specifically, in August, Kido acquired over 9.5 million shares and 4.5 million shares of Hung Vuong on two separate occasions to finalize its ownership of 58.05% of the company’s charter capital.

At the beginning of August 2024, Muong Thanh Group announced that it had taken over the Hoang Anh Gia Lai Hotel in Pleiku City from Cong Ty TNHH Dau Tu Hoan Sinh Gia Lai. The acquisition price was not disclosed.

Foreign investors are also increasingly making their mark in Vietnam’s real estate sector. Dr. Su Ngoc Khuong, Senior Director of Savills Vietnam, noted that foreign investors, particularly those from Japan, South Korea, and Singapore, are keenly interested in Vietnamese real estate and have long-term plans and substantial capital to invest.

A recent Savills report highlighted several notable M&A transactions, mostly in the industrial real estate and residential segments, with a significant influx of Japanese investment into Dong Nai and Binh Duong provinces. This shift indicates that instead of solely focusing on high-end residential projects with familiar names like Keppel Land and Capitaland in the past decades, the real estate market now welcomes new players like Lotte Group, GS, Sumitomo, and Hong Kong Land.

One of the most significant M&A deals in terms of value is the collaboration between Kim Oanh Group (Vietnam) and NTT Urban Development, Sumitomo Forestry, and Kumagai Gumi Co Ltd (Japan) to develop The One World, a 50-hectare residential project in Binh Duong. With a total investment of over $1 billion, the project encompasses shophouses, terraced houses, compound villas, and apartments, along with a host of premium amenities catering to educational, recreational, shopping, and business needs.

Another noteworthy M&A transaction is the plan by Electronic Tripod Vietnam, a subsidiary of Tripod Technology Group (Taiwan), to construct the Electronic Tripod Vietnam Factory in Chau Duc Industrial Park, covering an area of approximately 18 hectares. With an investment of $250 million, the factory will contribute to the realization of Tripod Technology Group’s expansion and development strategy for high-tech electronics. It is also the largest high-tech project in Chau Duc Industrial Park to date.

Another deal that attracted significant attention was Nishi Nippon Railroad’s (Japan) acquisition of a 25% stake in the Paragon Dai Phuoc project from Nam Long Group for approximately $26 million. Following this transaction, valued at roughly VND 662 billion, Nam Long is expected to earn a profit of around VND 200 billion, contributing to the group’s second-quarter profit.

According to Cushman & Wakefield Vietnam, from late 2023 to the first half of 2024, there were about 16 M&A deals in the real estate sector. Foreign investors remain focused on seeking high-quality, legally compliant, and potential clean land. Industrial real estate, in particular, has become increasingly attractive. For instance, a Singaporean investment fund, Mapletree Logistics Trust, acquired two Class A warehouses in Binh Duong and Hung Yen for SGD 68.4 million (over $50 million). Additionally, CapitaLand Investment plans to invest an additional $70-110 million in Vietnam over the next two years, focusing on building or acquiring industrial parks.

Legal Framework as a Catalyst

While large deals continue to transpire, experts note that the number of mega-deals exceeding $25 billion has slowed compared to previous M&A cycles due to tighter regulatory scrutiny to prevent monopolies. Nonetheless, they remain optimistic about the positive outlook for Vietnam’s M&A market in the second half of 2024.

The Vietnam Association of Real Estate Brokers (VARS) also shared a similar perspective in its report on the real estate market in the first half of 2024, stating that M&A activities in the real estate sector are expected to gain momentum in terms of frequency and scale, involving financially strong domestic and foreign enterprises, both within and outside the industry. VARS predicts that M&A activities in the latter half of 2024 will remain vibrant, benefiting from the supportive legal framework as new laws related to real estate take effect.

Echoing this sentiment, Dr. Khuong forecasts that the new land laws coming into force later this year will serve as a crucial catalyst for more dynamic M&A activities in the real estate sector. “From now until the end of the year, the real estate market will witness more massive M&A deals initiated by foreign investors. This is especially true given that financially strong enterprises will be able to enter the market more swiftly through specific projects, amidst limited land resources and the financial struggles faced by some companies in the industry, burdened by bad debts and challenges in their revival,” he emphasized.

Trang Bui, General Director of Cushman & Wakefield Vietnam, shares a similar outlook, anticipating that foreign investors will accelerate their capital injection in the latter half of 2024 through joint ventures, investment partnerships, or M&A deals. She predicts that this trend will be more prominent in the industrial real estate, hospitality, office, and retail segments. “Currently, foreign investors have the upper hand, so domestically-owned enterprises with strong financial capabilities should seize the opportunity to embrace the forthcoming growth,” Bui advised.