M&A real estate will appear "strange waves"

Many experts have said that the M&A market in 2019-2020 will appear "strange waves" such as M&A in industrial parks, hotel chains, restaurants...


Many foreign investors are considering buying hotel chains

Exciting in every segment

M&A activities in real estate began to grow strongly in Vietnam since 2017 and recorded quite a number of big deals. Currently, this activity is still taking place increasingly exciting in most real estate segments.

Although the real estate market in the first half of 2019 has been quiet, M&A activities have recorded a lively performance. Typically, Nam Long spends more than VND 2,300 billion to buy a 70% stake in Dong Nai Waterfront City project, Keppel Land cooperates with Phu Long Real Estate to buy 60% stake in a land plot with a total area of ​​6.2 hectares in Nha Be district...

Recently, on May 16, 2019, the Investment Fund came from the land of the rising sun Samty Asia Investments Pte. Ltd. (a subsidiary of Samty Corporation) and a leading Japanese real estate development company via Vietnam New Urban Center LP, the company has signed an agreement to pour US $ 22.5 million into Phat Dat Real Estate Development Joint Stock Company to develop a number of projects in Ho Chi Minh City.

Earlier, a number of big M&A deals in the real estate industry also took place. Most notably, the SK Group deal spent US $ 1 billion buying a 6.1% stake in Vingroup.

Recently, SK expressed its desire to buy more shares of Vietnam Oil Corporation (PVOIL). Last year, the group bought 3.55 million shares, equivalent to 5% of the shares, becoming a major shareholder of PVOIL.

In 2018, Vingroup offered preferential shares worth US $ 400 million to a Korean investor, Hanwha. Thus, only the deal between Korean investors and Vingroup has reached US $ 2.41 billion, accounting for 25.64% of the total M&A value of the period 7/2018 - 7/2019.

In the race to pour capital from 2018 to 2019 by foreign investors into Vietnam, Hong Kong (China) is a fairly famous name. According to a report by the Ministry of Planning and Investment, in the first 6 months of 2019, Hong Kong led the list of investors investing in Vietnam, with 5.3 billion USD. In particular, Beerco Limited (Hong Kong) spent $ 3.85 billion to buy shares of Vietnam Beverage Co., Ltd in Hanoi (wholly foreign-owned enterprises own more than 53% of the capital by Sabeco).

Along with that, Singapore continues to maintain the Top 3 position on the track, with a total M&A value of 2018 - 2019 of US $ 1.6 billion.

The most prominent of the names from Singapore is the GIC Investment Fund of Singapore Government with a series of deals worth hundreds of millions of USD in recent times. In April 2018, GIC invested a total of US $ 1.3 billion (equivalent to VND 29,500 billion) in two forms: investing in buying shares of Vinhomes and providing a debt instrument for Vinhomes (such as loans) to carry out the project.

Not only targeting the real estate industry, at the end of 2018, GIC also spent USD 101 million to buy additional 27.4 million Masan shares (MSN). In mid-October 2018, this fund bought 24.5 million MSN shares worth VND 2,187 billion (US $ 95 million)... GIC joined early and was the biggest investor in the stock issue times to initial public offering (IPO) of Vietjet Air, Vinhomes, Techcombank, Vietcombank, FPT, PAN Group, Vinasun,...

In addition, many large corporations in Singapore, such as Keppel Land, CapitaLand, Mapletree... have also been carrying out a series of big M&A deals in the field of real estate in Vietnam.

Along with Singapore, Japanese investors also saw a strong acceleration. Previously, Japanese investors were interested in and carried out many M&A deals in the field of finance and consumer goods, in 2018-2019, they changed their tastes to real estate.

Will welcome many new waves

In 2019 and the following years, the view of many economic experts shows that M&A deals will continue to focus more on areas, in which high-end real estate and retail are expected to attract many foreign capital flows. In addition, the fields of telecommunications, energy, infrastructure, pharmaceuticals, and education are also expected to contribute significantly to this activity in the coming period.

For the real estate industry in particular, according to experts, in the period of 2019-2020, the M&A market will appear "strange waves" such as the acquisition of industrial parks, M&A of hotel chains, M&A of apartment chains. Signs that many large manufacturers in the world turn to Vietnam to set up production bases are the catalysts for supporting industries, business activities and the life of a large number of professionals. At the same time, workers also choose Vietnam to catch demand.

Comments on the M&A market in the coming time at the M&A Forum 2019 "Change to break through", organized by the Investment Newspaper in cooperation with AVM Vietnam Company last week, Mr. Dang Xuan Minh, General Director of the Company AVM, MAF research leader, said that investors from Korea, Japan, Thailand and Singapore will continue to dominate.

“The market is also witnessing investment trends from Hong Kong in a number of sectors. In the coming period, it is possible to look for larger-scale deals, especially divestments of equitized large enterprises and the participation of foreign investors", said Mr. Minh.

In the near future, in the real estate sector, it is likely that the market will witness the Warburg Pincus acquisition of The Grand Ho Tram (Ba Ria - Vung Tau) in a total investment of $ 600 million, or joint ventures Japanese investors cooperated with Phu My Hung to develop Midtown high-class project; Indochina Capital (ICC) and Kajima Corporation jointly develop the hotel chain Wínk...

In addition, a number of foreign investment funds from Europe, Japan and Korea are also actively seeking for available hotels, beautiful locations that can be renovated to develop into a hotel chain.

Meanwhile, assessing the luxury apartment real estate, Richard Leech, senior director, Alpha King Real Estate Company, said that Alpha King is focusing on the upper class customers. In fact, foreign investors are not easy to compete in the mass market, but they have great opportunities in the high-end segment. So far, this is still going well, and Alpha King continues to expand that strategy.

“We have had quite a clear strategy from previous years. At that time, Alpha King recognized that Vietnam's middle class would increase rapidly, so it cooperated with all parties to implement luxury projects in the center of Ho Chi Minh City.

Next time, reaching out to the suburbs to compete in other segments or not has not been thought of, but still concentrated in the center of the big city. In addition, we focus on different aspects of technology to provide the best user experience for products”, said Richard Leech.

Mr. Andrew D. Kim, Development Director of Global M&A Center, Korea Investment Promotion Agency (KOTRA) said that Korean M&A activities in Asia are quite positive. For example, in Malaysia and Singapore real estate and finance are the two favorite fields; In the Vietnamese market, from the preferred industries of manufacturing and heavy industry, they are now shifting to real estate.

“Currently, the fields of investment that Korean investors are interested in are also more diverse, because the Vietnamese market with nearly 100 million people is growing very strongly. Areas such as infrastructure, utilities and real estate are starting to attract great attention because in fact, it can develop in parallel and receive great demand from the wave of investment in the industrial sector.” Mr. Andrew D. Kim said.

According to Trong Tin