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Vietnam is increasingly becoming a bright spot for international investors, thanks to its ability to maintain high economic growth rates and create a favorable environment for M&A transactions. The opening up of sectors such as manufacturing, technology, retail, and renewable energy has made the country an attractive destination for Singaporean investors.
In mid-July, Levanta Renewables, a renewable energy company based in Singapore and supported by Actis, announced the acquisition of a 28.7 MWp rooftop solar project from Tiến Nga Corporation, one of the leading logistics providers in Vietnam. This is the largest rooftop solar project in Đồng Nai province and among the largest in Vietnam, covering nearly 200,000 m² and expected to generate more than 34 GWh annually, supplying green energy to Vietnam Electricity (EVN).
Levanta Renewables stated that the deal is a significant milestone in expanding operations in Vietnam, aiming to achieve a 1.5 GW capacity in Southeast Asia. Actis also emphasized that this acquisition would help Levanta Renewables reach its capacity expansion goals while promoting energy transition in Vietnam by providing clean, stable energy at competitive prices.
In June, Sembcorp Solar Vietnam, a subsidiary of Sembcorp, completed the acquisition of a majority stake in three subsidiaries of GELEX, adding 196 MW of solar and wind power to its investment portfolio. Sembcorp also plans to acquire a 73% stake in another hydropower company, increasing its total renewable energy capacity in Vietnam to 455 MW.
Another Singaporean company, Great Master, purchased a 20% stake in Trung Khởi Corporation in Quảng Trị, while AG&P acquired 49% of the stake in the Cái Mép LNG Port in Bà Rịa – Vũng Tàu.
Foreign investors, particularly from Singapore, continue to play a significant role in Vietnam’s M&A market, contributing to several high-profile deals in 2024. In the first half of 2024 alone, Singapore ranked third after South Korea and China in the number of M&A deals, with a total value of USD 349 million from 142 transactions.
Opportunities for Singaporean Investors in Vietnam
- Stable Economic Growth: Vietnam maintains a high economic growth rate, creating a favorable environment for M&A transactions. The opening of sectors like manufacturing, technology, retail, and renewable energy presents opportunities for Singaporean investors.
- Free Trade Agreements (FTAs): As a member of agreements such as the CPTPP, RCEP, and EVFTA, Vietnam offers investors access to larger markets with preferential tariffs, making it an attractive destination for Singaporean companies seeking expansion.
- Young Population and Growing Consumption: With a young population and rising consumer demand, Vietnam presents a promising market for retail, technology, and financial services sectors, offering substantial opportunities for growth.
- Attractive Investment Policies: The Vietnamese government is increasingly improving the legal framework and investment environment, facilitating M&A transactions and creating an easier path for foreign investors.
Challenges for Singaporean Investors in Vietnam
- Legal and Regulatory Differences: The differences in legal systems and M&A approval processes can pose challenges for foreign investors, particularly in sectors such as real estate and banking, where regulations can be more complex.
- Intensified Competition: Investors from other countries, such as Japan, South Korea, and China, are also keen on entering the Vietnamese market, creating strong competition in high-growth sectors.
- Legal Infrastructure and Enforcement: While improvements have been made, the enforcement of legal regulations can still be inconsistent, causing delays in M&A transactions and affecting their efficiency.
- Risks from Economic and Geopolitical Instability: Global factors such as economic fluctuations, supply chain disruptions, and trade policies can impact M&A activity. These risks may affect investor confidence and the overall stability of the market.
In conclusion, while Vietnam offers many growth opportunities for Singaporean investors, there are challenges related to legal, regulatory, and economic factors that need to be navigated carefully. As the market continues to mature, addressing these issues will be crucial for attracting sustained foreign investment and fostering a robust M&A landscape.
Recently, following ASL LAW’s success at the Vietnam Mergers & Acquisitions (M&A) Forum 2023, where ASL LAW was recognized as the Outstanding M&A Advisor for the period 2009-2023, ASL LAW was once again honored as the Outstanding M&A Advisor of 2023-2024 at the 16th Vietnam M&A Forum.
ASL Law is a leading full-service and independent Vietnamese law firm made up of experienced and talented lawyers. ASL Law is ranked as the top tier Law Firm in Vietnam by Legal500, Asia Law, WTR, and Asia Business Law Journal. Based in both Hanoi and Ho Chi Minh City in Vietnam, the firm’s main purpose is to provide the most practical, efficient and lawful advice to its domestic and international clients. If we can be of assistance, please email to [email protected].
ASL LAW is the top tier M&A law firm in Vietnam. If you need any advice, please contact us for further information or collaboration.
