Vietnam - Japanese firms keen on M&As

M&A (merger and acquisition) activities in Vietnam were forecast to continue rising this year, particularly in the partnership with Japan, heard a seminar on attracting IPO and M&A partnerships between Japanese and Vietnamese enterprises held on March 6 in Hanoi.

Although the total number of M&A deals decreased from over 340 in 2010 to around 250 last year, the total value of the deals more than doubled during the period, increasing from $1.7 billion in 2010 to $4 billion in 2011, said Nguyen Anh Phong, deputy general director of the Ha Noi Stock Exchange.

Last year saw an increase in the interests of Japanese companies in Vietnam's M&A market, with 23 per cent of total deal value coming from Japan, Phong said, citing remarkable deals reached last year including Mizuho bank purchasing a 15 per cent stake worth $543.8 billion in Vietcombank and Unicharm buying a 95 per cent stake worth 125 in Diana Vietnam.

Phong revealed finance and consumer goods were the two most appealing sectors to Japanese enterprises, with 50 per cent of the deals struck in these sectors.

Director of the New Listing Department of the Tokyo Stock Exchange, Yasuyuki Konuma, said Japan was the world's largest investor and its wealthy individual investors were keen on investing in Asian stocks.

"Japanese household assets are the highest in the world at $19.48 billion, of which cash/deposits in banks account for 55 per cent," Yasuyuki said, emphasising that the Japanese government was encouraging people to invest their savings.

"Investment in Vietnamese companies is the highest since 2009."

Toshifumi Iwaguchi, director of RECOF Corporation, said decreasing population and domestic demand were driving Japanese companies to invest abroad.

Recent statistics demonstrated that the number of Japan-outbound M&A deals was rapidly increasing, with Japanese enterprises being highly interested in M&As in Asia, Toshifumi said, noting the number of outbound M&A deals with Asian companies last year rising 41 per cent year-on-year.

"Vietnam ranks third after China and India as a possible investment destination through M&As," Toshifumi said, explaining strong interest in Vietnam was based on its market growth and workforce.

Some Japanese companies preferred entering the Vietnamese market by co-operating with Vietnamese partners with existing market shares and knowledge, he said, adding while some Japanese firms tended to buy minority stakes to limit their investment risks, others chose to acquire majority stakes to take control of the target company.

Toshifumi said Japanese firms targeted a wide range of sectors but the percentage in the manufacturing sector had been steadily increasing, from 10 per cent in 2007 to 39 per cent last year.

Welcoming Japanese capital investment, Deputy Minister of Planning and Investment Dang Huy Dong said seeking capital to stabilise and expand business was now the most important issue to Vietnamese companies, and M&As were an effective channel to raise capital.

"The economic relationship between Vietnam and Japan has been increasing strongly in recent years and Vietnam expects the two countries' co-operation in the M&A industry will also be strengthened in the future," Dong said.

Dong said that recent M&A deals were still impulsive and unprofessional due to the lack of an appropriate legal framework, industry expertise, human resources and professional consultancy.

Therefore, in order to allow M&A deals to develop and protect the rights of participating companies, authorities would draw up M&A regulations as well as promote co-operation between management bodies and enterprises to provide information and training in new business activities.

VIR - VNA

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