Indonesian firms explore M&As
Indonesian firms explore M&As
Vietnam and Indonesia are seeing big merger and acquisition opportunities.
At last week’s conference on promoting investment in Vietnam, organised in Indonesia by the Ministry of Planning and Investment (MPI) in co-operation with Indonesia Investment Coordinating Board, Indonesian Cement CEO Dwi Soetipto said the group had acquired a 70 per cent stake in the Thang Long Cement Plant in the northern province of Quang Ninh several years ago.
“This deal has been a success story, prompting many Indonesian investors to turn to the Vietnamese market now,” he said.
The conference saw an impressive 150 Indonesian firms turn up. They were also joined by Vietnamese businesses such as the State Capital Investment Corporation - the state shareholder in Vietnamese enterprises, VPBank Securities (VPBS), PetroVietnam Power Corporation, PetroVietnam Exploration Production Corporation, Hanoi Housing Development and Investment Corporation, and Hanoi Urban Development, Construction and Investment Consulting Joint Stock Company.
At the conference, Barry David Weisblatt, head of research at VPBS, told Indonesian participants about investment opportunities in Vietnam via merger and acquisition (M&A), particularly in retail, banking, construction and production of consumer goods.
Known as a leading advisor for M&A deals in Vietnam, VPBS representatives said that the firm had been selected by some Indonesian firms to provide them with advisory services for their M&A deals in Vietnam in the coming time.
Established in 2006, VPBS has become one of the largest securities firms in Vietnam with chartered capital of VND800 billion (nearly $40 million). The firm aims to be a market leader by 2015 with differentiated products and services.
The Indonesian Chamber of Commerce and Industry also announced that many Indonesian firms were set to visit Vietnam next montth to investigate M&A opportunities.
Both Nguyen Xuan Thuy, Vietnam’s Ambassador to Indonesia and Mahendra Siregar, chairman of Indonesia Investment Coordinating Board, said better understandings between the two sides would need to be developed in order for enterprises from both nations to conduct M&As. Vietnam’s M&A market value increased from $1 billion in 2008 to $5 billion in 2012, with successful big deals also involving Indonesian investors. In early August 2014, the Vietnam M&A Forum, jointly organised by VIR and AVM Company, also drew major attention from local and foreign firms.
Vietnam’s state-owned enterprises (SOEs) started undergoing a comprehensive restructuring process via equitisation many years ago, but it is just the present time when the process has been strongly accelerated. The Vietnamese government’s target is to equitise 432 SOEs in 2014 and 2015, while state capital in non-core businesses will be divested.
Out of the 432 SOEs slated for equitisation by the end of next year, 348 have established equitisation steering committees, 247 have conducted a formal business valuation, 88 have had their valuations approved by the government. Significantly, 55 SOEs have had their equitisation plans approved by the government, including the Vietnam National Textile and Garment Group (Vinatex) and Vinalines.
Of the 55 SOEs approved for equitisation, 32 are currently listed on either the Hanoi or Ho Chi Minh stock exchanges, while the rest held their auctions directly at their offices or at securities firms.
In telecommunications sector, for example, in mid-June the prime minister made a decision to separate VMS – the operator of Mobifone, from its parent company VNPT to better carry out its equitisation plan, which the prime minister is expected to approve within this year. Though Mobifone’s value and plan to sell shares to foreign strategic partners have yet to be finalised, there may be a number of competitors vying for Mobifone shares.
MPI’s Minister Bui Quang Vinh stressed that Vietnam’s equitisation programme was creating new M&A opportunities, and that a new M&A wave would serve to boost the equitisation and economic restructuring process in Vietnam.
While Vietnam has seen a fast rising influx of M&A deals from foreign investors, Vietnamese firms are similarly closing their own deals outside of Vietnam’s borders.
Not long ago FPT signed a deal with RWE Group, under which it will purchase RWE IT Slovakia. This was FPT’s first M&A deal in a foreign market. In late December 2013, Vinamilk announced its acquisition of 70 per cent of US-backed Driftwood Dairy. In August 2012, Viettel Global bought a 65 per cent stake in Tanzania’s Epocha & Golden Ocean Tanzania Ltd (Egotel). In October 2012 PetroVietnam announced it had concluded its purchase of Oil Block No67 on the Maranon River in Peru.
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