Spotlight Asia: Kroll's M&A Newsletter March 2016

Date: Mar 2016

Foreign inbound M&A in frontier Vietnam sees exponential growth.

Inbound mergers and acquisitions (M&A) in Vietnam totaled US$3.5bn in 2015, posting an exponential increase of 406% from US$706m the prior year and accounting for 94% of deal activity in the country. Inbound M&A is a component of foreign direct investment (FDI) in Vietnam, which totaled US$13bn in 2015, a decline of 13% from 2014, but a significant increase from investment barely reaching the US$2bn mark in the early 2000s. Even as China’s slowdown sends shockwaves across neighboring markets, sentiment remains strong that FDI in Vietnam will continue unabated as investors set their sights on Southeast Asia’s next emerging market.

Kroll, the global leader in risk mitigation and response, has once again teamed up with Mergermarket to analyze the challenges and potential of foreign investment in Vietnam in “Investing in Vietnam: Open for business”, the latest edition of their Spotlight Asia series.

This issue seeks to trace the contours of Vietnam’s swiftly evolving investment landscape, replete with pressing risks and compelling attractions at every turn. It includes an interview with Ramon Ghosh, Associate Managing Director at Kroll, presenting insights on mitigating business risks and conducting pre-transactional due diligence on potential investment targets in Vietnam.

Trends and highlights in the newsletter:

  • Vietnam recorded the second-highest number of cross-border transactions into Southeast Asia and the third-largest by deal value for inbound deals, while inbound M&A in Vietnam continues to be dominated by Asian acquirers, who completed 77% of inbound deals in Vietnam in 2015, accounting for 94% of deal values.
  • The traditionally favored manufacturing sector came up tops again in 2015, contributing to 46% of total inbound deal value and 27% of volume with US$1.3bn from eight transactions, as rising wages in China enabled Vietnam to receive manufacturers looking for cheaper places to manage their operations.
  • The consumer sector accounted for 39% of total inbound value and 20% of volume in 2015 from six deals worth a total of US$1.1bn, driven in part by expectations for Vietnam’s middle class to double in size from 12 million to 33 million by 2020.
  • Private equity remained active in 2015, albeit at decreased levels of investment, with total investment dropping 74% from US$988m in 2014 to US$260m – almost US$1bn short of 2013 totals, though activity is expected to rebound in the year ahead.
  • According to Ramon Ghosh, Associate Managing Director at Kroll, it is vital in conducting pre-transactional due diligence to “have a cultural understanding of how business is done. Speak to the right people, undertake detailed inquiries and unravel the complex network of relationships. Having boots on the ground and a ground-level perspective is key.”

Please click here to get the full report.

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