Foreign investors bet big on Vietnamese firms
The number of foreign investors, who contribute capital or acquire shares in Vietnamese firms, is surging rapidly, given by the firms’ high growth prospects and the government’s effective actions in improving the country’s business and investment environment.
Figures from the Foreign Investment Agency under the Ministry of Planning and Investment showed that foreign investors spent US$5.7 billion on 5,275 deals to contribute capital or acquire shares of Vietnamese firms in the first nine months of the year, up a whopping 36.8 percent year-on-year.
The surge was notable as the country saw only 2,182 FDI new projects valued at US$14.1 billion to be licensed in the period, down 3 percent year-on-year.
Nguyen Noi, deputy director of the Foreign Investment Agency, said the amount of capital contribution and share purchase of foreign investors in Vietnamese firms is actually much higher than the figure announced.
One of the latest deals with big value this year was SK Group’s US$474 million acquisition of a 9.45 percent stake in Masan Group Corporation last month. The acquisition made the South Korean group the largest foreign shareholder in the Vietnamese conglomerate, whose principal businesses include food and beverages, financial services and natural resources.
According to Woncheol Park, representative director of SK Group’s South East Asia Investment, SK Group decided to become Masan’s largest foreign shareholders as it has huge respect for Masan’s management team and admire the company’s track record of building successful businesses over the years.
“Their businesses are just starting to reflect true growth potential and we are backing Masan to grow their consumer wallet share by five times to US$100 per consumer per annum,” Park said, adding that the two sides will actively work together to identify strategic opportunities to expand into attractive categories in Vietnam.
Park also believed this is the first of many investments of SK Group with Masan and that this partnership will be a win-win for both groups.
Investment wave forecast
According to experts, foreign investors have paid their attention to capital contribution and share purchase in Vietnamese firms as they see the firms have high growth prospects while the government is making great efforts to improve the country’s business and investment environment to support firms.
Besides, foreign players also prefer this investment form as it can help them rapidly step in the Vietnamese market. Advantage of the investment form is that investors do not have to wait for licenses. In addition, they can start working immediately without having to spend time for learning and researching the market.
Experts forecast that such foreign investment inflow will continue spiraling upward in the coming time.
Andy Ho, managing director and chief investment officer of VinaCapital, said Vietnam has a lot of great businesses to invest in and the economy is stable and growing. Therefore, a lot of foreign investors still want to invest in Vietnamese firms.
Sharing the same view, Jiun Park, senior deputy managing director at the Korea Trade Investment Promotion Agency, revealed that many South Korean small and medium-sized firms have enquired about the process capital contribution or share purchase in Vietnamese firms.
Park called this “the third wave of investments from South Korea”, following the first wave conducted by conglomerates in labor-intensive industries and the second one by consumer goods companies.
A characteristic of the third wave is strategic alliances between South Korean and Vietnamese companies, Park said, adding that the South Korean partner can provide modern technology, while the Vietnamese side can help with brand presence, market share and product distribution in Vietnam.