The vibrant mergers and acquisitions (M&A) market in Vietnam is developing and the 2017-2018 period is forecasted to witness more successful M&A deals, as well as new state divestments, which is a big opportunity for domestic and international investors.
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The M&A market in Vietnam reported a record value of $5.8 billion in 2016 and KPMG Vietnam even forecasted that the second half of 2017 will witness more sizable M&A deals.
The reason is that the private sector in Vietnam is considering M&A an important strategy to ensure sustainable development and expansion. Also, the Vietnamese government is speeding up state divestment in a number of big firms. Thus, it is likely that more M&A deals will come in the second half of 2017 and early 2018.
Below is the list of ten sizable divestment that are forecasted to be implemented during 2017-2018.
1. Vietnam Dairy Products Joint Stock Company (Vinamilk)
The Vietnamese government has approved the plan on selling more than 48.3 million Vinamilk shares, an equivalent of 3.33 per cent of the company’s chartered capital, which will decrease state ownership to 36 per cent. The income earned from this deal is forecasted to be about VND6.5-7 trillion ($286-308 million). The deal is expected to be implemented in October 2017.
2. Saigon Beer, Alcohol and Beverage Corporation (Sabeco)
The state is holding 89.59 per cent of the stakes in this enterprise. The divestment plan is being discussed and is expected to be submitted to the Ministry of Industry and Trade (MoIT) in the third quarter of 2017.
3. Hanoi Beer, Alcohol and Beverage Joint Stock Corporation (Habeco)
The state is holding 81.79 per cent of the chartered capital in this firm. Under the approval of the prime minster (PM), Habeco sold 5.77 per cent to strategic shareholder Carlsberg, a Danish brewer, which now holds 15.77 per cent.
The government plans to divest the entirety of its holding, which is equivalent to VND9 trillion ($396 million). Habeco’s consultation firm is finishing the divestment plan to submit to MoIT.
4. PetroVietnam Power Corporation (PV Power)
It is expected that the initial public offering (IPO) will take place in December 2017. In accordance with the decision on evaluating PV Power to implement equitisation, as of December 31, 2015, PV Power was valued at VND60.6 trillion ($2.67 billion). Of the total, the amount of state-owned capital in PV Power was nearly VND33.6 trillion ($1.5 billion).
5. Vietnam Southern Food Corporation (Vinafood 2)
Vinafood 2 plans to implement its IPO in the third quarter of 2017. According to the equitisation plan, which was submitted to the PM by the Ministry of Agriculture and Rural Development in September 2016, Vinafood 2 was valued at nearly VND5 trillion ($220 million).
6. PetroVietnam Oil Corporation (PV Oil)
PV Oil is valued at more than VND10.3 trillion ($453 million) and this value was approved by MoIT. PV Oil has submitted the plan on selling 64.9 per cent of its state-owned capital for approval.
In particular, 44-49 per cent is expected to be sold to strategic shareholders, 15-20 per cent is hoped to be sold through open auction, and only 1 per cent will be preferentially sold to PV Oil’s staff.
Its IPO is scheduled to take place at the end of the third quarter or in the early fourth quarter of 2017.
7. Vietnam Urban and Industrial Development Investment Corporation (IDICO)
The corporation offered 300 million shares at the price of VND10,000 per share at its IPO. The government plans to sell 108 million shares in IDICO, which is equivalent to 36 per cent of the chartered capital.
135 million shares (45 per cent of the chartered capital) will be transferred to strategic shareholders, and more than 55 million shares (18.44 per cent of the chartered capital) will be sold through open auction, and the remaining 1.5 million shares will be sold to company staff.
IDICO has the total chartered capital of VND3 trillion ($132 million) and is operating in infrastructure development for urban and industrial areas.
8. Song Da Corporation
Song Da Corporation has the chartered capital of VND4.5 trillion ($198 million), an equivalent of 450 million of outstanding shares in the market. The government plans to retain 51 per cent stake in this firm until the end of 2019, then reduce its ownership to under 50 per cent in 2020.
135 million shares (30 per cent of the chartered capital) will be transferred to Song Da Corporation’s strategic shareholders, 84.77 million shares (18.82 per cent of the chartered capital) will be sold through IPO, and 822,000 shares (0.18 per cent of the chartered capital) will be sold to company employees. Song Da Corporation is scheduled to finish its equitisation plan in 2017.
9. Vietnam Rubber Group (VRG)
VRG is expected to finish equitisation in the third quarter of 2017. In accordance with the decision of the PM, the state will hold 75 per cent of VRG’s chartered capital, including 20 member units and four business units. It is expected that after offering a 25 per cent stake at the IPO, VRG will earn an estimated amount of VND10 trillion ($440 million).
10. Power Generation Corporations (Genco) 1, 2, 3 (under Vietnam Electricity Corporation)
The PM required Genco 3 to finish its equitisation plan in 2017, while Genco 1 and 2 are due in 2018. The equitisation plan of Genco 3 is currently waiting for the PM’s approval. The plan reveals that the state will retain at least 51 per cent of Genco 3’s stakes after its IPO.
Genco 3 was valued at VND91.4 trillion ($4 billion). Of the total, state-owned capital was VND24.6 trillion ($1.1 billion).
By Huu Tuan
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