LookAtVietnam Bridge - The mergers and acquisitions market (M&A) is developing rapidly in both quantity and size, a seminar discussing M&A held in Ho Chi Minh City heard on July 3.

According to the Ministry of Planning and Investment’s Foreign Investment Agency’s statistics, by the end of last December, there had been nearly 1,100 M&A transactions with a total value of 16.8 billion USD.

In the first half of last year alone, there were 46 transactions of 626 million USD, compared to the 32 worth 245 million USD in 2006 and 18 worth 61 million USD in 2005.

M&A were seen in almost all areas, according to the general director of An Binh Securities Nguyen Hong Quan.

Indochina Capital Vietnam Holding has acquired a 20 percent stake of local fashion firm NinoMaxx; while in production, Kinh Do Corp has bought the right to use ice cream manufacturer Wall’s trademark, and Anco has purchased a Nestle milk factory.

In the financial and banking sectors, Japan ’s Daiichi Group acquired joint venture insurer Bao Minh-CMG; Morgan Stanley became a strategic shareholder of PetroVietnam Finance Joint Stock Corporation (PVFC); and HSBC invested in Techcombank.

Eximbank has also sold 25 percent of its equity to four foreign entities including Sumitomo Mitsui Banking Corp, VOF Investment Ltd, Mirae Asset Exim Investment Ltd and Mirae Asset Maps Opportunity Vietnam Equity Balanced Fund 1.

The trend was driven by competition in the market, the emergence of new business opportunities and the demand for expanding business or changing investment targets, said director of the Foreign Investment Agency, Phan Huu Thang.

In securities particularly, State Securities Commission chairman Vu Bang said the rapid decline of the market in recent months has caused a number of securities firms to suffer large losses, and some were considering M&A so as to avoid bankruptcy.

Au Lac Securities has sold 49 percent of its equity to its foreign partner, Technology CX, while Vietnam Securities also sold a 49 percent interest to Malaysia ’s RHB Investment Bank for about 67 billion VND (4.2 million USD).

Likewise, Golden Bridge Investment and Securities Ltd has bought a 49 percent equity in Click&Call Securities, and Singapore s Morgan Stanley has spent 145 billion VND (9 million USD) to acquire a 48.3 percent stake in Huong Viet Securities.

“In the coming years, these activities will only continue to develop and have profound impacts on business modes, significantly contributing to the restructuring of the economy,” said Thang.

Thang expected that as many as 35-50 percent of domestic companies will have M&A activities with partners within the next six to ten years. The country now has about 300,000 companies and is expected to have 500,000 by 2010.

M&A, however, hasn’t been detailed in legal documents, and firms are still reserved in providing information about their companies. This is hindering the development of M&A, An Binh Securities said in a press release on July 3.
Thang said the Ministry of Planning and Investment planned to issue a decree on M&A activities related to foreign partners.

(Source: VNS)