M&A activity tipped for another strong year
M&A activity tipped for another strong year
In an interview late last year with a Wall Street Journal reporter, the State Bank of Vietnam’s Deputy Governor Nguyen Thi Hong said it was encouraging weak banks to voluntarily restructure themselves in 2015 through mergers and acquisitions.
These M&As are coming about as part of the State Bank’s efforts to mop up bad debts and restructure the country's fragmented banking sector after a decade of rapid expansion.
An estimated six to eight M&As are likely to occur in 2015. Vietnam's largest bank in terms of market value, Vietcombank, could link with Saigon Bank for Industry and Trade and Hanoi-based VietinBank may join with OceanBank, the State Bank initially announced.
BIDV could take similar steps with Mekong Housing Bank and VietinBank might also merge with Petrolimex Bank, according to the State Bank’s preliminary reports.
The State Bank later recanted and said the details of possible mergers were not technically official, and any M&As would be formally announced to the market as the specifics materialise.
Other potential mergers in the pipeline include the Maritime Bank with Mekong Development Bank, and Sacombank with the Southern Bank for which preparations got underway last year.
The first three months of this year have also seen strong M&A activities in a number of non-banking industries.
At the beginning of the year, Hoang Huy Investment Services Joint Stock Company announced it would acquire a 99.78% stake in Hoang Giang Services Development Joint Stock Company.
If the acquisition is successful, Hoang Huy Company could reach a revenue of VND3,400 billion and an after tax profit of VND283 billion for 2015.
The government has also decided to let go of its 97.7% stake in the Vietnam Motor Industry Corporation (Vinamotor) once considered the key enterprise central to its strategy to develop the automobile industry.
Four private investors have come out of the wood work voicing an avid interest in acquiring Vinamotor since the State first announced its long awaited intention to part with it.
The M&A wave has also spread to aviation. Analysts have said they see signs that the State may be trying to quicken the equitization process of selling off its control of enterprises in an ever widening number of industries.
Undisclosed sources have indicated the State is considering selling its entire interest in the Quang Ninh Port currently held by Vinalines, the state-owned flagship shipping carrier, to the T&T Group.
The owner of T&T Group, Do Quang Hien, a highly influential businessman, reportedly is prepared to chip in VND490 billion to close the deal.
In addition, as icing on the cake, T&T Group is hoping the government will toss in the opportunity to acquire a controlling interest in the Phu Quoc International Airport.
Although technically not an M&A deal, the National flag carrier Vietnam Airlines has announced it is seeking to sell off a 20% stake in the company. The company made the announcement on March 12 at a shareholders meeting in Hanoi.
After the proposed sale, the government’s share would shrink to 75% from the current 95%, which is a clear indication of the intent by the government to relinquish control through a series of staggered sales.
Many domestic and foreign investors are also eyeing M&A deals in electronics, which too are expected to be busier than usual this year.
A representative of leading Thailand electronics store Power Buy, owned by Thailand’s second richest person recently announced his company is acquiring a major stake in one of Vietnam’s largest shopping centre chains, Nguyen Kim Trading JSC.
Nguyen Kim is among the biggest electronics shopping centre operators in Vietnam, currently running 23 stores nationwide.
Recently, a spokesperson of The Gioi Di Dong company announced it too has plans to expand rapidly by acquiring prime locations through mergers and acquisitions to shortcut the lengthy time it takes construct new facilities and wait for them to mature.
Leading economist Dinh The Hien notes that M&A activities last year focused on real estate, banking and production. This year, long-term investors are looking to acquire a controlling interest in government run enterprises.
