FiinGroup is pleased to present our intensive report of Vietnam MA 2019, the 9th issue of this report. This report presents the extensive data mining of MA deals in Vietnam in the reviewed period, as well as analysis by key investors and industries where we recognize potential investment opportunities in the near future.The research provides latest information on market activities as well as competition landscape of MA in Vietnam. Three main segments of MA categories including (i) Inbound MA, which is when a foreign company merges with or acquires a domestic company) (ii) Domestic MA, which is when two domestic companies merge with or acquire other (iii) Outbound, which is when a domestic company merges with or acquires a foreign company.In addition, we provide indepth review for the 4 outstanding sectors: Real estate, Industrial goods Services and Food Beverage and banks and 3 trendy sectors: Health Care, Education and Utilities.We also reviewed the key themes that shaped the overall MA picture in Vietnam throughout 20181H2019 including Valuation of selected deals, Updates on progression of SOE IPOs and Divestments, FTAs and opportunities and notable regulatory changes that matter MA.Above all, we offer our perspectives on MA activities in the reviewed period as well as the key trends to watch for the years aheadKey financial figures on reviewed transactions are also included in the Appendices. 2018 MA activity plummeted in value by 44% to US7.54 bn from the 2017’s record due to the shortage of megadeals and delay in SOE ‘s IPO and divestment. The market has stayed calm in the first 6 months of 2019. Both the number and value of deals fell by 22% and 55% on 1H2018 levels. Inbound deals in 2018 registered US4.2bn, decreasing by 37% yoy compared to inbound value in 2017 without the mega SABECO deal. The inbound market remains quiet during the first half of 2019, but still accounted for 67% of total MA value. 1H2019 only recorded US1.45bn from 25 transactions, a 67% decrease compared to same period last year. Since 2018, investors from Singapore and South Korea escalated their investments in Vietnam and dominated the inbound market in terms of deal value. Meanwhile, despite the highest number of deals, Japanese investors usually contributed small and mediumsized deal. Meanwhile they key inbound investors from Thailand have reduced the size of their investments 2018 witnessed an upward in domestic MA scale, recording US3.26bn from 174 transactions, average deal size of nearly US19mn which is significantly improved from 2017’s level of US14mn. Half of domestic deal value in 2018 are made of mega deals in Real Estate, and Construction with active acquirors: Vingroup, Novaland, and An Quy Hung. Domestic MA activities ended the first half with a modest performance. Although 1H2019’s deal volume is comparable to 1H2018’s. total deal value of US700mn, equal to less than half of 1H2018’s. Outbound MA, despite accounting for an insignificant portion of the total MA value showed great prospects. The reviewed period 20181H2019 witnessed two big deals closed by Vietnamese companies oversea including FPT Corp’s acquisition of 90% stake in the USbased techadvisory firm Intellinet Corp and the transaction made by Yeah 1 to acquire 100% of Youtube multichannel network ScaleLab (although the deal value was later net off as Yeah 1 sold the acquired stake back to the previous owner). Real Estate continued to lead both the deal value and volume in 2018, followed by Banks, Industrial Goods and Services, FB, and Construction Materials. The sectors that stood out most so far in 1H2019, capturing 94% of total deal value were Industrial Goods Services, Health care, Construction Materials, FB, and Utilities. Migration of manufacturers from regional countries due to the ongoing trade war is expected boost the demand for industrial real estate, including warehouses and industrial parks. Shifting of foreign manufacturers to Vietnam due to FTAs and trade war will also boost the demand for Industrial Goods Services with key sectors such as logistics and transportation services. SOE IPOs and Divestments are lagging far behind targets. The government issued Official Dispatch requesting 127 SOEs to complete IPOs and Decision No 12322017NDCP for divesting state capital in 406 SÓE between 2020, By the end of 1H2019, SOE IPOs achieved 26% of the plan for 20172020, while SOE divestments fulfilled only 10% of the initial plan. It seems infeasible to complete the given plans by 2020. 2019 saw the signing of the EUVietnam Free Trade Agreement (EVFTA), the EUVietnam Investment Promotion Agreement (EVIPA), and the entry into force TransPacific Partnership (CPTPP). These signings is expected to stimulate foreign capital inflows and encourage foreign players to seek investment opportunities in Vietnam, given the increasing transparency and promising removal of 49% foreign ownership cap. The New Competition Law coming into force on 1 July 2019 and focusing on (1) competitionrestraining agreements, (2) market dominance (3) economic concentration, and (4) unfair competitive practices is poised to matter MA transactions with some notable changes, especially related to merger filing, merger control, the combined market share of deal participants and jurisdiction for competitionrestraining acts and economic concentration
Waiting for breakthrough VIETNAM M&A 2019 Research Report Issue | August 2019 Financial Information | Business Information | Market Research Preface FiinGroup is pleased to present our intensive report of Vietnam M&A 2019 In addition to the M&A data mining, we also focus on M&A opportunities by featuring some industries where we recognize potential investment opportunities arising given its new dynamics and regulatory developments We also covered the latest state of SOE IPOs and divestments, in-depth sector reviews and outlook for the years ahead The report utilized our 9-year M&A historical data in Vietnam In addition to data analysis, the report also leverages on the authors’ extensive knowledge and experience in advising various M&A transactions in Vietnam We have surveyed relevant foreign and local institutional investors as well as conducting a number of in-depth interviews with experienced M&A advisers and Government officials during our preparation We strongly believe that this report will be valuable to institutional investors, investment companies and foreign players who are considering M&A as a strategy to set a foothold or to expand your business in Vietnam About FiinGroup This report is prepared by a team of experienced analysts, researchers and data clerks at FiinGroup FiinGroup is the Vietnam’s leading integrated service provider of financial data, business information, industry research and other premium advisory services Our Mission is to Enlighten the Market We’re on a mission to help investors and enterprises grow their businesses and gain competitive advantage with the trusted information and data provided by FiinGroup FiinGroup is now serving thousands of corporate clients including securities companies, research houses, asset managers, investment companies, industry players as well as sophisticated individual investors Our Market Research division has been established as the first independent research house in Vietnam, covering various major sector in Vietnam and providing local insights to our clients at quality standards of the World’s prestige advisory firms More details can be found at http://fiinresearch.vn/ If you have any questions about this report or our services, please not hesitate to contact Dong Le, Director of Market Research Services at dong.le@fiingroup.vn or +84 (24) 3562 6962, ext 110 Vietnam M&A 2019 Research Report| Issue | August 2019 Table of contents PREFACE Table of figures Abbreviation M&A in Vietnam at a glance 1.2 Key facts and figures 1.2 Key findings & key trends to watch Business landscape 2018-1H2019 M&A in Review 3.1 2018-1H2019 M&A in a nutshell - 10 8–9 10 11 -14 15 – 34 15– 21 3.2 Inbound M&A 22 – 28 3.3 Domestic M&A 29 – 32 3.4 Outbound M&A 33 – 34 Sector review 35– 57 4.1 Real estate 35 – 40 4.2 Industrial goods and services 41 – 43 4.3 Food and beverage 44 – 46 4.4 Banks 47 – 49 4.5 Emerging sectors for M&A: Health care, Education and Utilities 50 – 57 @ 2018 FiinGroup JSC All rights reserved All information contained in this publication is copyrighted in the name of FiinGroup, and as such no part of this publication may be reproduced, repackaged, redistributed, resold in whole or in any part, or used in any form or by any means graphic, el ectronic or mechanical, including photocopying, or by information storage or retrieval, or by any other means, without the express written Vietnam M&A 2019 Research Report|recording, Issue | taping, August 2019 consent of the publisher Table of contents Key themes 58 - 71 5.1 Valuation Review 58– 60 5.2 Updates on SOE IPOs and Divestment 61– 65 5.3 FTAs and opportunities 66 -68 5.4 Regulatory updates, barriers to M&A in Vietnam and expected changes 69-73 Outlook and perspectives 74-75 Appendices & Disclosures 76-93 Our Methodology 94-95 Important Disclosures 96 @ 2019 FiinGroup JSC All rights reserved All information contained in this publication is copyrighted in the name of FiinGroup, and as such no part of this publication may be reproduced, repackaged, redistributed, resold in whole or in any part, or used in any form or by any means graphic, el ectronic or mechanical, including photocopying, or by information storage or retrieval, or by any other means, without the express written Vietnam M&A 2019 Research Report|recording, Issue | taping, August 2019 consent of the publisher Table of figures Figure number Tittle 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 Vietnam GDP Growth 2015-2021f Vietnam Population structure Vietnam urbanisation rate 1980-2018 Vietnam M&A Market size 2008 – 6M2019 M&A average deal size (US$mn) 2008-6M2019 Proportion of Deal Value (US$mn) and Number of Deal by value ranges Total M&A Deal Value (US$mn) & Number of Deal by Top Sectors, 2018 Total M&A Deal Value (US$mn) & Number of Deal by Top Sector, 1H2019 Total Deal Value by Category, 2013-1H2019 Inbound M&A (US$mn) in Vietnam, 2013 - 1H2019 Top Inbound M&A Deals, 2018 – 1H2019 Inbound M&A (US$mn) Deal by Country, 2018 Inbound M&A (US$mn) Deal by Country 1H2019 Inbound M&A (US$mn) into Vietnam by South Korean Investors, 2011 – 1H2019 Inbound M&A (US$mn) into Vietnam by Singaporean Investors, 2011 – 1H2019 Inbound M&A Activities (US$mn) by Top Sector Domestic M&A Total Deal Value (US$mn) & Deal Number, 2011 – 1H2019 Domestic M&A activities by top sector Domestic M&A Deal Value (US$mn) & Deal Number in Construction & Materials Outbound M&A Activities (US$mn) 2011-1H2019 by Vietnam Domiciled Enterprises Inbound M&A Activities (US$mn) in Real Estate, 2011 – 1H2019 Domestic M&A Activities (US$mn) in Real Estate, 2012 – 1H2019 Inbound M&A Activities (US$mn) in industrial goods & Services, 2011 – 1H2019 Total M&A Deal Value (US$mn) & Deal Number, Food & Beverage Noticeable F&B deals in 2018 – H12019 Total M&A Deal Value (US$mn) & Deal Number, Banking Recent Divestments in the Banking Sector M&A Deal Value (US$mn) & Deal Number 2011-1H2019 M&A Deal Value Proposition, 2011-1H2019 Education M&A Deal Volume, 2011-1H2019 Education expenditure of Vietnamese people, US$bn Vietnam's school age population (millions) Outbound internationally mobile tertiary students (Thousands) Utility M&A Deal Volume, 2011-1H2019 Number of Solar Power projects registered and completed Top M&A deals in renewable energy 2018-1H2019 Valuation Multiples of 2018-1H2019 M&A Deals Valuation Multiples of 2018-1H2019 M&A Deals by Sector Number of successful IPO 2011-1H2019 Number of IPOs 2016-2020: Plan vs Actual Divestment volume 2017-2020: Plan vs Actual Top upcoming SOE Divestments under SCIC’s portfolio Charter capital (US$mn) of upcoming IPOs Number of upcoming IPOs by sector Vietnam Inbound M&A Deal Value (US$mn) by Country Total Deal Value (US$mn) in Vietnam by sector Vietnam M&A Market by ICB Level II Sector, 2018 – 1H2019 Vietnam M&A Market by ICB Level IV Sector, 2018 – 1H2019 Valuation Multiples of M&A Deal by Sector, 2018-1H2019 Upcoming IPOs 2018-1H2019 Top IPOs 2017-2020 Vietnam M&A 2019 Research Report| Issue | August 2019 Page 13 14 14 16 17 18 19 20 21 23 23 24 25 26 27 28 30 31 32 34 36 38 42 45 46 48 48 51 51 53 54 54 54 55 56 57 59 60 62 62 63 64 65 65 77 77 78 79-80 82 84 86 Abbreviations No Word Stands for CAGR Compounded Annual Growth Rate CAR Capital Adequacy Ratio CMSC Commission for the Management of State Capital at Enterprise CPTPP Trans-Pacific Partnership (CPTPP), AHFTA ASEAN-Hong Kong, China Free Trade Agreement EVFTA EU-Vietnam Free Trade Agreement EVIPA EU-Vietnam Investment Promotion Agreement F&B Food and Beverage FDI Foreign Direct Investment 10 FOL Foreign Ownership Limit 11 FTA Free Trade Agreement 12 IPO Initial public offering 13 M&A Merger and acquistion 14 MARD Ministry of Agriculture and Rural Development 15 MOC Ministry of Construction 16 MOCST Ministry of Culture, Sport and Tourism 17 MOH Ministry of Health 18 MOIT Ministry of Industry and Trade 19 MOST Ministry of Science and Technology 20 MPI Ministry of Planning and Investment 21 PC People's Committee 22 PM Priminister 23 RHS Right hand side 24 RE Renewable energy 25 SBV State Bank of Vietnam 26 SBV State Bank of Vietnam 27 SCIC State Capital Investment Corporation (SCIC) 28 SEGs & SCs State Economic Groups and State Corporations 29 SOE State-Owned Enterprise 30 SPA Shareholder purchase agreement 31 VAMC Vietnam Asset Management Company 32 Y-o-Y/Y/Y Year over year 33 YTD Year To Date Vietnam M&A 2019 Research Report| Issue | August 2019 Section 1: M&A in Vietnam at a glance Vietnam M&A 2019 Research Report| Issue | August 2019 Vietnam M&A in 2018: Key facts & Figures 3,103 Accumulated deal volume 2003-2018 266 Deal volume 2018 56% $28mn % of Inbound M&A value 2018 Average deal size 2018 Top winner inbound investors 2018 Deal value (US$m) Singapore 1,412 South Korea 1,260 United States 525 Thailand 306 Japan 285 21% $7.54bn M&A Deal value 2018 M&A Value growth (CAGR) 2008-2018 Deal>$100mn as % of Deal $100mn as % of 1H2019 M&A value Deal