Yen devalues, Japanese businesses increase investment abroad
According to data from KPMG auditing company, 3 years ago, domestic investors dominated the mergers and acquisitions (M&A) market, but by 2023, the top 5 in M&A all belong to foreign investors. The total value of M&A transactions in the first 10 months of 2023 is 4,4 billion USD with more than 260 deals, of which 80% of transaction value is from the healthcare, finance, and real estate industries. The average value of deals is 54,5 million USD.
Dr. Nguyen Anh Tuan - RMIT University - commented that the recent trend is that the largest industry group is technology, followed by healthcare... retail and consumer goods only account for 8-9% but are important fields. affect the national economy. In particular, in recent years Japanese businesses have participated very strongly in M&A deals. Typically, the Japanese Group Sojitz through Sojitz Asia Pte.Ltd. and Sojitz Vietnam Co., Ltd. acquired the entire largest food distribution company in Vietnam, Dai Tan Viet Joint Stock Company (New Viet Dairy).
The reason for the above trend, according to Dr. Nguyen Anh Tuan, is because the Japanese yen is depreciating, causing Japanese businesses to find ways to "bring money to invest abroad" and this trend will continue in the near future. .
Experts predict that in 2024, M&A will continue to be vibrant (economist Pham Chi Lan attended online)
In addition to Japan, Attorney Dao Tien Phong, CEO of Investpush law firm, informed that many investors from countries such as Singapore, the US and China are also very interested in the M&A market in Vietnam. In particular, Chinese investors want to buy back all or part of businesses that own restaurant chains or manufacturing factories but have existing orders to the US and Europe. Lawyer Dao Tien Phong believes that when there is an M&A plan, there should be an equitization structure first for legal convenience and to avoid tax risks. In addition, businesses must also pay special attention to the "anti-dilution" strategy to avoid having the entire company taken over, if only a part is intended to be sold.
“Selling out is too easy, but it weakens internal strength”
In 2024, Dr. Nguyen Anh Tuan commented that the M&A market will continue to be vibrant. Investors will target businesses with stable and long-term product investment strategies in the agricultural and food industries. Investors also want to close deals in areas that can take advantage of cheap valuations such as real estate and construction. “In addition, the positivity and excitement in the market also comes from internal reasons of domestic businesses. When domestic capital is tightened, many businesses are being forced to restructure, sell off assets, and call for investment to resolve financial pressure," he worried.
Economic expert Pham Chi Lan said that seeking capital from outside is a big trend for Vietnamese businesses because domestic capital is expensive. Even though capital is available, how to allocate and access it is still very difficult. Besides looking for capital, domestic businesses invite foreign investors to also look for technology, skills, management, markets, and take advantage of FTAs that Vietnam has signed.
Ms. Pham Chi Lan stated her opinion: "Looking for new investors, looking for investors from outside is what Vietnamese businesses need. But what is more needed is that macroeconomic policies must be good so that businesses can easily access external capital and help improve their position in the M&A process. This is something I'm very worried about. The number of businesses ceasing operations from the end of last year to the beginning of this year is still increasing. If businesses receive capital in time, it will not be like that."
In addition, Ms. Pham Chi Lan also noted that when discussing mergers and acquisitions, it needs to be understood in two senses. It is a business looking for investors to join hands, join hands, and grow together for sustainable and long-term development. Second are businesses that want to "sell out" to withdraw from the market.
“If "selling out" is too easy, it will weaken Vietnam's internal strength. Some Vietnamese product industries that have a certain position, both domestically and for export, may fall into the hands of foreign investors. We cannot have a medium or high economy if we are not self-reliant, but only rely on foreign investment. I support M&A in a way to strengthen domestic business capacity, but if it is a way of selling and giving up the playing field to foreign investors, it is very worrying," Ms. Pham Chi Lan warned.
Ms. Minh Huynh - Director of Tael Partners Fund:
When thinking about raising capital, it is necessary to ask: Why is it necessary to raise capital? What do I need from investors? Capital, technology or management? The second question is when investors come to us, how will it change, how will we manage it, what will we expect? Businesses must answer all of these questions before considering inviting investors to contribute capital.
