M&A prospects bright in many sectors

In late October, Vingroup signed an MoU with Benya Technologies, representing a group of investors from the Middle East and Africa exploring investment opportunities in Vietnam.

The two sides will assess feasibility and develop plans for several projects, including a hyper-scale data centre and related technical, power, and water treatment infrastructure. The total investment is estimated at $3.5 billion.

The hyper-scale data centre project will be developed in three phases, reaching an estimated capacity of 300MW, with the aim of meeting both domestic and international digital infrastructure needs and contributing to local social and economic development.

Benya CEO and chairman Ahmed Mekky said, “We are thrilled to partner with Vingroup to tap into the vast potential of the global big data and cloud computing markets. Vingroup’s reputation and strong execution capabilities give us great confidence in this partnership. We believe that this collaboration will not only benefit both companies but also contribute significantly to the development of the digital economy in Vietnam and the region, creating lasting value for society and the community.”

Also last month, South Korean conglomerate SK Group acquired Vietnam-based semiconductor company ISCvina Manufacturing in a deal worth $300 million.

ISCVina was funded by ISC Co., Ltd, a South Korean microchip manufacturing group that serves as a supplier for many high-tech corporations. ISCvina is operating in Ba Thien 2 Industrial Park in the northern province of Vinh Phuc.

Eric Johnson, partner at Freshfields Bruckhaus Deringer, said there is certainly interest among certain investors in semiconductors and data centres, although he is not expecting a material uptick in cross border merger and acquisition (M&A) transactions in these sectors in the near term. This is mainly because there are currently very few investable companies operating in these sectors in Vietnam.

“We might see some greenfield projects in this space, although energy limitations in some parts of the country and labour expertise will be issues here for the near term. I think we might see a sharp increase in liquefied natural gas (LNG) projects given the results of the recent US election and the pro-LNG policies that we expect the new administration to adopt,” he added.

In March, for example, LNG terminals and downstream infrastructure company AG&P LNG, a subsidiary of Nebula Energy, acquired 49 per cent in Cai Mep LNG Terminal, located in Ba Ria- Vung Tau province in the south.

Vietnam’s M&A activities are mainly concentrated in financial services, healthcare, real estate, and energy. FiinGroup identified financial services, healthcare, and energy as attractive industries for investors, collectively contributing 57 per cent of the total M&A value during the first nine months of 2024.

Meanwhile, emerging sectors like semiconductors, data centres, and LNG are attracting the interest of buyers. In particular, Vietnam’s tech sector is on the radar of foreign investors, especially data centres. This increase in interest is mainly attributed to the new Law on Telecommunication 2023, which allows foreign investors to own up to 100 per cent of data centre companies.

In late October, Singaporean telecoms provider M1 Limited agreed to acquire 70 per cent in ADG National Investment and Technology Development Corp, an IT solutions provider based in Vietnam. M1, through its wholly owned subsidiary AP Tech Holdings, will pay a total purchase consideration of VND720 billion ($28.4 million).

Johnson of Freshfields added that these emerging sectors are linked to Vietnam’s strong economic growth and growing middle class, and to the supply chain shifts seen over the last several years, especially with respect to industrial real estate.

“These emerging sectors will develop slowly from an M&A context, but lots of investors have their eyes on these sectors in Vietnam at the moment,” Johnson said. “The momentum will remain driven by strong economic fundamentals, supply chain shifts that favour Vietnam, and continued improvement of investment procedures for foreign investors.”

The flow of capital from foreign investors into Vietnam’s real estate market has remained positive, with multiple transactions currently under negotiation. Seck Yee Chung, partner of Baker McKenzie Vietnam, discussed with VIR’s Bich Ngoc on the market’s outlook.

Vietnam’s merger and acquisition transactions are being driven by foreign investors across various sectors. Ngu Truong, managing partner of law firm Vilasia, spoke with VIR’s Thy Nguyet about the current trends and tastes among investors.

2024 has been a relatively soft period for Vietnam’s merger and acquisition (M&A) market, as was 2023, in comparison with the three strong years which preceded 2023. Vietnam’s M&A experience during the first three quarters of 2024 was largely consistent with regional and global trends, although jurisdiction-specific headwind factors have also played a part.