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Billion-dollar deals and the cutthroat competition among securities companies

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Investment banking is a difficult business, which explains why only a few Vietnamese companies can carry it out, though the market is valued at billions of dollars.

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The boom in ‘blockbuster’ M&A deals in the last few years has brought big profits to IB divisions of some securities companies. 

According to the research team for the M&A Vietnam Forum, about 4,000 deals were made in the last 10 years with total value of $48.8 billion. In 2017, the total value of the M&A deals in Vietnam reached $10.2 billion, the highest value so far, which represented a sharp rise of 175 percent over 2016.

In 2018, FIA reported that total foreign capital to Vietnam reached $35.5 billion, and in the first two months of 2019, the figure was $8.5 billion. 

In the year, Vietnam surpassed Singapore to become the largest IPO market in the region. Five IPOs deals were made in 2018 with total value of $2.6 billion, including one that brought $1.35 billion to Vinhomes.

As the government of Vietnam is accelerating divestment from state-owned enterprises, Vietnam is likely to continue to be the biggest IPO market in Southeast Asia, according to a report from Baker McKenzie & Oxford Economics.

It is expected that Vietnam will stay at the Number 1 position from now to 2021, while the second and third positions will belong to Singapore and Thailand.

The huge capital flow from Singapore, Thailand, Japan and South Korea has fueled the ‘second M&A’ and ‘second IPO’ waves.

The bustling M&A market has brought big profits to securities companies. IB has become a hot business which brings turnover of hundreds of billion of dong each year.

Vietcombank Securities, backed by one of the four biggest commercial banks in Vietnam, Vietcombank, has great advantages in IB. It can provide package products, including IB to commercial banking, and design IB products accessible to prestigious domestic and international financial institutions.

It was the only auction agent selected by investors in the Sabeco divestment deal worth VND110 trillion, the largest deal in Southeast Asia in the last three years. 

It also became involved in a Vinaconex divestment deal valued at VND7.36 trillion, gave consultancy to an M&A deal of Vinatex, Vietnam-Australia Steel, and PAN Group, and acted as consultant and guarantor in the issuance of trillions of dong worth of corporate bonds. 

As for the prospects of the M&A market, Nguyen Minh Phong, a respected economist, said more deals would be made in the time to come, especially in three sectors: First, commercial banks the state plans to divest shares. Second, enterprises to be equitized that have good land funds. And third, divestment from consumer food companies.



Source: VietNamNet

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