Bright prospects for Vietnam-RoK M&A deals

08:34 | 20/12/2017 Cooperation

(VEN) - Many Korean companies have shown an interest in mergers and acquisition (M&A) deals with Vietnamese businesses. Such deals enable both sides to transfer technologies or cooperate to set up joint ventures, said Korea Trade-Investment Promotion Agency (KOTRA) President Kim Jaehong at a recent Vietnam-Korea M&A Seminar. The event was jointly held in Hanoi by the Republic of Korea (RoK)’s Ministry of Trade, Industry and Energy and KOTRA Hanoi. 

bright prospects for vietnam rok ma deals
Most RoK companies are interested in M&A in the fields of consumer goods and retail

Kim Jaehong said over the past 25 years, Vietnam and the RoK had promoted economic cooperation in a wide range of fields and achieved positive results. Bilateral trade in the first three quarters of 2017 reached US$47.2 billion and is expected to exceed US$50 billion by the end of the year, more than double the value in 1992 when the two countries established diplomatic relations.

Currently, Vietnam takes the lead among ASEAN countries in attracting foreign direct investment (FDI) from the RoK. Korean businesses in Vietnam have generated jobs for about 700,000 Vietnamese workers. Korean FDI in Vietnam has reached US$55.8 billion, with Samsung being the major investor.

Regarding the potential of bilateral cooperation, Kim Jaehong said he expects the two countries will expand their cooperation through M&A deals in support industries, services and education.

According to Michael DC Choi, Deputy Director of the Korea M&A Center under KOTRA, Korean investors are negotiating M&A deals with 12 Vietnamese companies in the fields of food processing, pharmaceuticals and financial technology (fintech), and these negotiations are expected to be completed within six months.

This year, many M&A deals between Vietnam and the RoK have been announced, including the acquisition of banks and securities companies.

Dang Xuan Minh explained the increase in such deals as a result of recent easing of restrictions on foreign ownership, opening more opportunities for foreign investors to join M&A deals in a wide range of fields. Most Korean companies are interested in M&A in the fields of consumer goods and retail, while some are attracted by real estate. In the financial sector, microfinance and commercial banks are most attractive to them.

Dang Xuan Minh, co-founder and managing director of the Vietnam M&A Forum, said more than 500 M&A transactions with total value of US$5.8 billion were conducted in Vietnam last year, accounting for about five percent of the total number of M&A deals in Southeast Asia. The RoK ranked fourth among countries closing M&A deals with Vietnam.

According to KOTRA Hanoi, a growing number of Korean funds and businesses want to invest in small and medium enterprises via capital contributions and M&As. From 2000-2016, overseas investments by Korean businesses tripled.

Huong Nguyen