Newsletter
Vietnam M&A Spotlight - July 2022
Freshfields' Vietnam M&A Spotlight keeps you up-to-date with the key business and legal developments in this sector. Please contact us if you would also like to receive our Vietnam Infrastructure Spotlight, Vietnam Environment Spotlight or Vietnam Competition Law Spotlight.
UKVFTA Conference
The conference “UK market: Unlocking great potential by leveraging the advantages of the UKVFTA”, which was co-held by the Ministry of Industry and Trade, the British Chamber of Commerce Vietnam, and British Embassy in Vietnam, was attended by more than 200 participants from the government, UK investors and Vietnamese businesses. Chris Milliken, Counsel of our Ho Chi Minh City office, and Vice Chair of the British Chamber of Commerce, was invited as one of the speakers, and he explained that the complementary nature of the economies and capabilities of Vietnam and the UK is what creates huge potential for cooperation between businesses of those countries. Source: Vietnam News
MARKET UPDATES
Sales by the State
- At a snail’s pace. Although equitisation and divestment of State capital in State-owned enterprises (SOEs) adds revenue to the State budget and improves corporate governance, the process is moving painfully slowly because of various obstacles. The list of divestments by the State Capital Investment Corporation (SCIC) for 2022 has 101 units including Hai Phong Thermal Power JSC, and Binh Minh Plastic JSC, but many large enterprises on the list of divestments in 2021 are not on the list in 2022, such as Sabeco, Tien Phong Plastic, FPT, Bao Viet, and Vinatex. Sources: Bizhub and Vietnam Plus
Healthcare
- Ready to be discharged. Quadria Capital, a health care-focused private equity firm, is exploring a sale of its Vietnam-based portfolio company FV Hospital. The buyout firm is working with an adviser on the potential divestment, which could fetch US$300-400 million in a deal. Other owners of FV Hospital, including its co-founder and Chief Executive Officer, may tag along and sell part or all of their stakes. Source: Yahoo Finance
Banking
- Sell, sell, sell. BRG-backed SeABank has plans to sell around 13.78 per cent of its existing registered capital to international investors. It is reported that the bank is working with a financial advisor to field interest from potential buyers. At the current share price, the transaction would be valued at about US$375 million. Source: DealStreetAsia
- Merging and acquiring. The Vietnamese government is urging banks to merge so as to increase their scale with a view to them becoming more competitive. The government wants banks to have a capital adequacy ratio of at least 10-11 per cent by 2023, and 11-12 per cent by 2025, according to a recent plan to restructure credit organizations and handle bad debts during the 2021-2025 period. Source: VN Express International
- The bigger, the better. Vietnam’s M&A market in 2022 is forecast to include big deals worth billions of dollars in the banking sector. Vietcombank will carry out a private placement of 6.5 per cent of its capital. If successful, the deal will raise around VND 30 trillion. Vietcombank is also expected to participate in restructuring a weak bank in the form of mandatory transfer. Source: Vietnam Plus
E-commerce
- Making waves. Temasek’s subsidiary, SeaTown, has invested US$50 million in OnPoint, a Vietnamese e-commerce solutions provider. This investment will support OnPoint in further investing in its best-in-class omnichannel marketing and sales solutions to better serve brands and consumers. Most recently, SeaTown made investments in the CrownX Corporation and Golden Gate Group in Vietnam. Source: Vietnam Investment Review
- CV boost. Vietnamese fintech major MoMo has acquired a 49 per cent stake in local securities brokerage house CV Securities. With this deal, MoMo will gain a license to distribute investment products on its app. The e-wallet company had 31 million users and 140,000 payment acceptance points last year, and is now a partner of more than 50 banks, and financial and insurance companies. Source: DealStreetAsia
- Small but mighty. Shinhan Financial Group, South Korea’s second largest banking behemoth, said it has reached an agreement to acquire a 10 per cent stake in Vietnam-based e-commerce company Tiki, with Shinhan Bank and Shinhan Card acquiring 7.44 and 2.56 per cent stakes in Tiki, respectively. Founded in 2010, Tiki is the fifth most popular e-commerce site in Vietnam with 17.9 million monthly visitors last year. Source: VN Express International
Education
- In high demand. Nguyen Hoang Group, one of the leading Vietnam-based educational services suppliers in Vietnam, is understood to be working with JP Morgan to find a buyer for a minority stake in the company that could value the company at approximately US$1 billion. They have reached out to potential purchasers, including private equity firms and other industry players, to evaluate interest. Sources: Vietnam Investment Review and DealStreetAsia
Real Estate
- Buying land. Real estate developer Novaland Investment Group JSC has received an investment of US$250 million from a consortium led by Warburg Pincus, which it plans to use to increase its strategic land fund and complete the development of some important projects. This investment underlines Warburg Pincus’ strategy of investing in businesses with significant potential, and marks the start of a strategic partnership between the two. Source: Bizhub
Infrastructure
- Fair winds. Trungnam Group is considering a sale of a 30 to 35 per cent stake in its wind and solar power portfolio. In April 2021, Trungnam sold a 49 per cent stake in the 204MW Trung Nam Thuan Bac Solar Power Plant in Ninh Thuan province to A Chau Industrial Technology JSC. In May 2021, it sold a 35.1 per cent stake in the 152 MW Trung Nam Wind Power Plant in the province to Hitachi Sustainable Energy of Japanese corporation Hitachi. Source: The Investor
- Keeping the taps running. Samsung Engineering acquired a 24 per cent stake in the Vietnamese water treatment company DNP Water from IFC for about US$41 million. Founded in 2017, DNP Water has increased its clean water output from 100,000 cubic meters per day in 2017 to 1.1 million at present. It has invested in 13 cities and provinces, becoming the top private clean water supplier in Vietnam. Source: The Investor
Aviation
- Turbulence. Vietnam Airlines is facing legal challenges in selling its failing low-cost carrier Pacific Airlines as regulations on managing state-invested capital tie its hands. The national flag carrier is looking for potential investors to acquire a stake in Pacific Airlines while trying to evaluate its value, and whether a private placement offer or public auction is suitable for the deal. Source: VN Express International
- New runway for recovery. Vietnam Airlines is seeking ways to restructure assets, sell aircraft and divest from certain businesses to cope with huge losses and to improve business operations. The carrier is proactively mapping out a 2021-2025 restructuring plan, with a focus on dealing with accumulated losses. Under its plan, Vietnam Airlines will recover business post pandemic and restructure assets, including selling aircraft, leasing older planes and divestment. Additionally, the airline plans to issue shares to increase its capital in the 2023-2024 period. Source: The Saigon Times
