Vietnam’s mergers and acquisitions (M&A) recorded high-value transactions, helping to liven up the market in the final months of 2024. The outlook is favorable, partly thanks to the improving legal framework.
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>> M&A market starts to improve thanks to high value transactions
The M&A market in Southeast Asia tends to decline in terms of the number and value of deals, and Vietnam is no exception. The main sectors attracting investment capital are real estate, retail and clean energy. Notable transactions in the first nine months of 2024 include the sale by Vingroup of 55% of the share capital of Vincom Retail, a transaction worth USD 982 million in commercial real estate. For its part, Sycamore Limited acquired the Tân Thanh urban city project, located in Binh Duong province, for 553 million USD.
Industrial real estate, a popular area
Industrial real estate is also attracting many investors, as large companies continue to increase their investments in Vietnam. For example, Tripod Technology Corporation (Taiwan) acquired 18 ha of industrial land in Bà Ria-Vung Tàu from real estate developer Sonadezi Chau Duc (SZC). Likewise, Atlantic, Gulf and Pacific LNG Company (Singapore) acquired 49% of the capital of the Cai Mep LNG terminal, in the same province.
Savills Vietnam noted several major transactions in the industrial sector in a recent report. Kim Oanh Group has joined forces with three Japanese companies NTT Urban Development, Sumitomo Forestry and Kumagai Gumi Co. Ltd to develop The One World, a 50ha residential area in Binh Duong province. Nishi Nippon Railroad (Japan) acquired 50% of the Paragon Dai Phuoc project for approximately USD 26 million from the Nam Long Group.
Troy Griffiths, deputy managing director of Savills Vietnam, said demand for industrial real estate would remain stable, fueled by the influx of foreign investment and infrastructure development. Economists predict that the entry into force on August 1, 2024 of new real estate-related laws, such as the Land Law of 2024 and the Real Estate Trading Law of 2023, will boost M&A activities in this area. However, the market remains awaiting significant transactions in other sectors, including retail, manufacturing, finance and banking.
According to data from the Department of Foreign Investment, from January to July 2024, Japan was the No. 1 investor in Vietnam, with nearly USD 595 million injected through capital contributions and share purchases. Singapore follows with USD 500 million, while the Republic of Korea ranks third with USD 323 million. Taiwan (China), the Cayman Islands and China complete the list of main investors, with 160, 184 and 124 million USD respectively. These countries and territories have been behind numerous M&A transactions in recent years, and the market anticipates massive investments from them in the near future.
Foreign direct investment flows
Since the beginning of October, the southern real estate market has recorded two major transactions. The Keppel group, based in Singapore, has sold 70% of its capital in the company Saigon Sports, main investor in the Saigon Sports City project. Two Vietnamese companies acquired 35% of this capital, for a total value of nearly 300.7 million USD. Keppel retains 30% stake in Saigon Sports.
A second operation, also carried out by Keppel, concerns the third phase of the Saigon Center project in Ho Chi Minh City. Japanese company Toshin Development plans to invest around USD 46.4 million to acquire shares held by the Keppel group. Another major transaction concerns the complete sale of The Spirit of Saigon project to the real estate company Phuong Dong Hanoi.
These deals helped to boost the M&A market during the last quarter of 2024. However, this market has not yet reached the expected level of dynamism, especially in large cities like Hanoi and Ho Chi Minh City.
Lê Hoàng Châu, president of the Ho Chi Minh City Real Estate Association (HoREA), pointed out that no projects were carried out through M&A during the first eight months of the year in this city. This is explained by the Real Estate Affairs Act, which requires the transferee to settle their financial obligations before any transfer is authorized.
For the end of 2024 and 2025, Savills Vietnam expects an increase in foreign direct investment flows as well as M&A transactions, driven by the improvement of the legal framework and infrastructure development. The industrial real estate sector will remain a preferred target for foreign capital, in response to the growing demand for production spaces.
A strengthened legal framework
The entry into force of the three real estate-related laws in August 2024 will create a more transparent legal environment, facilitating stable and sustainable market development as well as capital flows, particularly foreign capital. These laws will also enable the rapid deployment of legally secure projects. In addition, the Law on Credit Institutions, adopted in early 2024, introduces stricter regulations regarding ownership and concentration of credits, which will further stimulate M&A activities in the real estate sector, often “hidden” behind complex structures. of transactions.
Although activity in the banking sector has been particularly buoyant in recent months, foreign capital is expected to continue to “lead the wave” of mergers and acquisitions until early 2025. This reflects growing confidence in the Vietnamese financial market, strengthened by the country’s efforts to attract direct and indirect foreign investments, as well as to meet the requirements of international organizations regarding financial market transparency.
The Linh/CVN
