M&A in Vietnam: Which sectors are attracting investors?

Amidst the wave of production activity diversification by many multinational corporations to secure supply chains, Vietnam has emerged as a perfect choice. Among various investment options, mergers and acquisitions (M&A) have become a priority channel for foreign investors seeking to establish their presence in Vietnam.

The world is witnessing a shift in production activities as many multinational corporations seek to diversify their supply sources. In this context, Vietnam has attracted considerable attention from investors, especially in M&A transactions.

The year 2023 has been vibrant for Vietnam's M&A market. According to data from Mergermarket up to May 2023, Vietnam has witnessed 59 M&A deals with a total value of up to $2.6 billion. There are some notable transactions, such as ESR Group Limited's strategic acquisition of BW Industrial with a total value of $450 million; KKR Global Impact's investment of $120 million into EQuest; and DB Insurance's acquisition of a stake in Vietnam Aviation Insurance Company (VNI) for $57 million.

Vietnam remains a bright spot in terms of economic development potential and a potential destination for investors in the region.

Amid the concern over supply chain disruptions, diversification of supply sources has become a priority for multinational corporations, and Vietnam has emerged as an ideal option. Despite the risk of a global economic downturn, Vietnam remains a bright spot in terms of economic development potential and a potential destination for investors in the region.

In 2023, Vietnam's M&A market is expected to continue its sustainable growth and attract the attention of strategic investors and private equity funds. Strategic investors from Thailand, Singapore, Japan, and South Korea are actively participating in M&A activities in Vietnam to increase market share and diversify their business operations. The main driving forces for foreign investors through direct investment or M&A are Vietnam's strong growth and stable investment environment.

While M&A has become a priority channel for foreign investors to establish their presence in Vietnam, domestic enterprises and investors have also viewed M&A as a way to expand business and achieve rapid growth. Macroeconomic fluctuations have led to a high demand for M&A among local companies, either for restructuring, optimizing capital and assets, or raising capital to maintain business operations or facilitate business expansion.

Sought-after sectors:

The real estate sector is always subject to legal requirements and licensing considerations, especially in residential properties. Therefore, M&A transactions in the real estate sector may predominantly focus on operational assets, including commercial, industrial, hospitality, and renewable energy properties. These assets typically offer stable cash flows, and finding buyers and conducting due diligence for these assets may not take much time. Sellers prioritize these assets as they need quick cash flow to address financial difficulties.

In addition to real estate, key sectors such as financial services, consumer goods, and retail will continue to witness dynamic M&A activities due to strong growth prospects. With a large, young, and growing population, coupled with increasing household income and a middle-class population, Vietnam presents high growth opportunities for investors in the consumer goods and retail sectors in the coming years.

Moreover, with the Vietnamese Government's commitment to achieving Net Zero emissions by 2050, renewable energy and agriculture are predicted to be the next vibrant M&A sectors due to increasing investor interest in environmental, social, and governance (ESG) factors. The recent release of the Power Development Plan VIII and the Government's Net Zero commitment highlights significant investment potential in renewable energy and other priority areas, such as developing the electricity grid and electric vehicles.

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