2021 Vietnam M&A at a glance

2021 Vietnam M&A  at a glance

KPMG in Vietnam

Vietnam's 2021 M&A highlights

Solid performance despite the pandemic

Countries around the world witnessed negative GDP growth in 2020 and are still suffering from the lasting impact presented by the pandemic. Amid this challenging period, Vietnam has emerged as a rising star by keeping the economy growing, albeit at a slower pace. Vietnam’s economic stability can be attributed to the government’s measures to contain the spread of the virus, coupled with the continuing efforts to attract foreign investment and strong consumption driven by domestic demand.

The M&A market has followed suit, proven to be very resilient and even picking up in 2021. The first 10 months of 2021 (10M2021) has logged in USD8.8 billion in total (*), representing a 17.9% growth as compared with the whole 2020, or 13.7% growth compared to the pre-pandemic 2019, while the number of deals slightly declined.

Transaction value is heading uphill

Vietnam’s rising attractiveness as an M&A destination has been made clear not only by the increase in the aggregate transaction value but also by the higher average deal size.

Average deal size for a transaction with disclosed value has gone up from USD28.1 million in 2019 to USD42.8 million in 10M2021. More and more deals over USD100 million concluded over the review period, with 22 deals recorded in just 10M2021 vs. 19 deals in FY2019. More deals of similar value are expected to be announced by the end of the year.

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Key M&A sectors

Consumer Staples, Financials and Real Estate are favorable sectors for M&A transaction

Breaking down by sector, Consumer Staples, Financials and Real Estate have been the most favored targets, making up to 55% - 60% of the total value in the last few years and likely to continue in the future. They have benefited greatly from the booming demand for housing, financial services and convenience goods, resulting from a large population with a growing middle-class and rapid urbanization rate.

It comes with no surprise that year to date biggest M&A deals involve companies primarily operating in these sectors, namely Sumitomo Mitsui Financial Group’s USD1.3 billion investment in VPBank Finance Company (FECredit), SK South East Asia’s USD410 million investment in Vincommerce and the USD400 million investment in CrownX from Baring and Alibaba, all in 1H2021.

The rise of tech-related transactions

In addition to the sectors mentioned above, another sector that has received increasing interest from investors is Technology. In the first 10 months of 2021, the tech-related M&A landscape in Vietnam witnessed a big boost both in terms of deal volume and value. The deal volume has doubled while the aggregate transaction value increased more than threefold to nearly USD1 billion as compared to the full year 2020 and even surpassed the prepandemic level. Key drivers include the need for more investment in technological infrastructure, and to accommodate the ever-increasing demand to go digital to seek alternatives.

Online transaction will continue to grow after the pandemic as the government is pushing digital transformation, along with the growing population of young and tech-savvy consumers. Some of the biggest home-grown winners in the markets are VNG, VNPay, Sky Mavis (Axie Infinity’s developer), Momo and Tiki. These corporations have been attracting funding of hundreds of millions of dollars, giving them a well-deserved unicorn status. Notable recent transactions include AIA Insurance-led USD258 million injection into Tiki, USD152 million investment led by Andreessen Horowitz in Sky Mavis or Warburg Pincus-led USD100 million investment in Momo.

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