Vietnam ma research report 2018

StoxPlus is pleased to introduce Vietnam MA 2018 Research Report, the eighth issue of this report. This report presents the extensive data mining of MA deals in Vietnam in the reviewed period, as well as analysis by key investors and industries where we recognize potential investment opportunities in the near future. This report also reviewed latest status of SOE IPOs and divestments, and Banks Restructuring in VietnamThe research provides latest information on market activities as well as competition landscape of MA in Vietnam. Particularly, for this issue, we focus on analyzing three main segments of MA categories including (i) Inbound MA, which is when a foreign company merges with or acquires a domestic company) (ii) Domestic MA, which is when two domestic companies merge with or acquire other (iii) Outbound, which is when a domestic company merges with or acquires a foreign company. Key financial figures on reviewed transactions are also included in the Appendices.Below are the most critical findings in our issue: New record high was set in Vietnam MA 2017 with total deals value of US13.38bn thanks to a number of “mega” deals valuing over US100mn. 2017 MA activities set new record high 32% increasing deal value compared to the previous year 2016 even despite lower deal number (262 deals in 2017 compared to 307 deals in 2016). Fueled by growth of 2017, MA activities in 1H2018 continued its upward trend. Particularly, total 1H2018 MA deal value recorded at US3.76bn which is slightly 4% increase from US3.59n in 1H2017. Consumerbased sector recorded deals with highest value. In 2017, most active MA sectors are: Food Beverage (US6.32bn ~ 35 deals), Real Estate (US3.46bn ~ 41 deals) Industrial Goods Service (US795mn ~ 32 deals), and Construction Materials (US655mn ~ 20 deals). In 1H2018, most active MA sectors are: Real Estate (US1.95bn ~ 17 deals), Banks (US742mn ~ 17 deals), Financial Services (US297mn ~ 9 deals) and Personal Household Goods (US142mn ~ 8 deals) Inbound MA accelerated fast during 20171H2018. The constantly changing economic environment of Vietnam had provided numerous opportunities for foreign investors. In fact, inbound MA made up US11.79bn, equivalent to 87.9% of total MA deal value in 2017, and US2.83, equivalent to 75.3% of the value in 1H2018. The shift in inbound MA in 2017 – 1H2018 were the mega deals. Most aggressive foreign investors are from Thailand, Singapore, and the U.S. Thailand scored the biggest MA deal of the year through the acquisition of SABECO by ThaiBev at US4.7bn. Notable deals from Singaporean investors are the acquisition of Vinamilk by Jardine CC at US1.2bn, Vinhomes by GIC Pte Ltd at US1.3bn. Notable deals from American investors are the acquisition of Techcombank by Warburg Pincus at US370mn, Serenity Holdings by Warburg Pincus VinaCapital at US300mn, Asia Commercial Bank by Este Investments at US152mn. Domestic MA activities have been declining since 2016. Nevertheless, year 2017 and 1H2018 saw an increasing number of mega deals. Deal value and volume of 2017 from domestic MA decreased in terms of absolute value with US1.55bn from 61 deals. The most active sectors for domestic MA in 2017 1H2018 were Real Estate and Food Beverage. For two consecutive years, Real Estate topped chart as the most active sector in domestic MA market. Particularly, Real Estate deals made up 64% of total domestic MA activities in 2017, and 41% in 1H2018 Outbound MA by Vietnamese companies were quiet in 2016 1H2017. MA across the borders by Vietnamese firms were still very insignificant compared to domestic and inbound MA during 2017 – 1H2018. Domestic firms had not been actively expanding overseas through MA. Outbound MA usually accounted for less than 1% of total MA. The review period 20171H2018 only saw 1 deal valuing US11mn, which was the acquisition of Angkor Milk (Cambodia) by Vinamilk. SOE IPOs in 20171H2018 were modest in terms of volume. There were only 21 and 16 SOE IPOs in 2017 and 1H2018 respectively. The progress of IPOs during 2016 to 2018 was also significantly less aggressive than in the previous period since 2012 to 2015. Nevertheless, the government of Vietnam’s SOE divestment schedule by 2020 promised opportunities for future MA. Foreign investors are particularly interested in Vietnam’s Financial Services sector, given its tremendous untapped retail potentials and Vietnam government’s Banks Restructuring incentive. During 20171H2018, several local banks and credit institutions in Vietnam found investors from across borders via both financial investments as well as strategic investments. Consumer finance received the most attention thanks to its strong growth in recent years, with a few leading consumer finance companies already established its market share. Looking forward, MA in consumer finance is expected to escalate in both size and number since MA is the quickest way to penetrate the country’s growing consumer finance market

Chief Executive Officer Director, Biinform Assistant Manager Market Analyst

StoxPlus is pleased to present our intensive

report of Vietnam M&A 2018 In addition to

the M&A data mining, we also focus on M&A

opportunities by featuring some industries

where we recognize potential investment

opportunities will be arising given its new

dynamics and regulatory developments We

also reviewed latest status of SOE IPOs and

divestments, and Banks Restructuring

Our M&A report utilized extracted database

with over 7 years of historical data in

Vietnam In addition to data analysis, the

report also relies on the authors’ extensive

knowledge and experience in advising deals in

Vietnam We have surveyed relevant foreign

and local institutional investors as well as

conducting a number of in-depth interviews in

with experienced M&A advisers and

Government officials during our preparation

We strongly believe that this report will be

valuable to institutional investors, investment

companies and foreign players who are

considering M&A as a strategy to set a

foothold or to expand your business in

Vietnam

About StoxPlus

This report is prepared by a team of experienced analysts, researchers and data clerks at StoxPlus StoxPlus is a leading financial and business information provider in Vietnam Our services include provision of high quality data feeds, analytic tools and market research

StoxPlus is now serving a client portfolio of over 100 corporate data clients including securities companies, research houses, asset managers, investment companies, and thousands of sophisticated individual investors

Our Biinform division has been established as

an independent research house in Vietnam to provide local insights to our clients at quality standards of the World’s prestige advisory firms More details can be found at www.biinform.com

If you have any questions about this report or our services, please do not hesitate to contact Thuan Nguyen, CEO of StoxPlus at

thuan.nguyen@stoxplus.com or +84 (24) 3562

6962, ext 111

2.2 Banks & Financial Services Restructuring 30 – 322.3 Increasing Foreign Capital Inflows 33 – 34

Section 1: M&A Activities Review

Remarkable M&A record for year 2017 and strong growth momentum for 1H2018

Source: StoxPlus

Figure 1: Vietnam M&A Total Deal Value (US$mn) & Number of Deals, 2003 – 1H2018

1H2017 vs 1H2018

M&A activities in 2017 and 1H2018 were driven

by an increasing number of mega deals valuing over US$100mn In particular, mega deals contributed 75% of total M&A deal value of

2017, and also 75% of total M&A deal value 1H2018 Bidders of these mega deals were domestic, as well as foreign investors Highest valued deals in 2017-1H2018 were closed by bidders from familiar countries like Thailand, Singapore, Hong Kong, United States and Japan

Specifically, mega deals of 2017 included the acquisitions of SABECO by ThaiBev at US$4.7bn, Vinamilk by Jardine C&C at US$1.15bn, VincomRetail by multi investors at US$743mn, Happy Land Project by Vina Oscar Hotel at US$668mnSignificant deals of 1H2018 Vinhomes by GIC Private Ltd at US$4.7bn, Berjaya Vietnam Financial Center by Vinhomes, Techcombank by Warburg Pincus LLC., ACB Bank by Alp Asia Finance Vietnam

2017 M&A activities set new record high with a

massive jump in total deal value to US$13.38bn,

increasing deal value by 32% compared to the

previous year 2016 even despite lower deal

number (262 deals in 2017 compared to 307

deals in 2016) Overall in 2017, M&A transactions

spread across various sectors: Real Estate

(US$3.46bn ~ 41 deals) , Food & Beverage

(US$6.32bn ~ 35 deals), Industrial Goods &

Service (US$795mn ~ 32 deals), and Construction

& Materials (US$655mn ~ 20 deals)

M&A activities in recent years had been on an

upward trend and after hitting record in 2017,

M&A market in 1H2018 expected to be no less

active 1H2018 witnessed a drop in deal volume,

but still an upturn in deal value compared to the

same period of previous year 1H2017

Particularly, there were 104 deals in 1H2018

with total deal value of US$3.76bn The three

most buoyant industries in terms of deal value in

1H2018 are Real Estate (US$1.94bn ~ 17 deals),

Banks (US$742mn ~ 3 deals) and Financial

Services (US$297mn ~ 9 deals)

NEW RECORD HIGH was set in Vietnam M&A 2017 with total deals value of US$13.38bn thanks to a number

of “mega” deals Fueled by growth of 2017, M&A activities in 1H2018 continued its upward trend Particularly, total 1H2018 M&A deal value recorded at US$3.76bn which is slightly 4% increase from US$3.59n in 1H2017.

6,314 5,143 3,504 4,7885,226

10,154 13,381

3,761

0 2,000 4,000 6,000 8,000 10,000 12,000

2017 M&A: Food & Beverage dominated via mega deals

In terms of total deal value:

2017 M&A in this sector alone recorded

US$6.32bn, equivalent to 47% of the year’s

M&A activities The most noticeable M&A deal

in F&B was the acquisition of 53.59% stake in

SABECO by ThaiBev at US$4.7bn Excluded

this deal, the remaining F&B deals generated

about US$1bn deal value, including 5.5% stake

acquisition of Vinamilk by Jardine C&C at

US$1.15bn, 57.3% stake acquisition of VILICO

by GTNFoods at US$27.59mn

deal value, with 41 transactions valuing at

US$3.48bn, equivalent to 25% of the year’s

M&A activities The most significant 2017 Real

Estate deals included US734mn deal from

Vincom Retail IPO, attracting multi-investors

from Asia

In terms of number of deals:

M&A activities in 2017 – 41 deals or

approximately 16% in total M&A deal

number in 2017 Real Estate only scored

second highest in deal value, but the highest in deal volume Vietnam's recovery from the housing bust of 2009-2013 and current booming economy heat up this market, especially through M&A There were both old and new real estate being acquired in the market for M&A Most of M&A in real estate projects were purchase

of on-going or delayed projects that needed more capital to resume

Beverage, Constructions & Materials and Utilities were among the most active

industries in 2017 with high potential demand, and consistent performance over the years In addition, Vietnam’s broad macroeconomic stability certainly boosted activities within these aforementioned sectors

Section 1: M&A Activity Review | The Whole Market

Figure 2: Total M&A Deal Value (US$mn) & Number of Deal by Top Sectors, 2017

1H2018 M&A: strong growth momentum remained and the rise of Banks and Financial Services sectors

In terms of total deal value:

consistently appeared in top 5 most active

sectors for M&A in the last7 years according to

our database since 2011 In 1H2018, Real Estate

sector recorded 17 transactions, totaling at

US$1.95bn or 49% of total M&A deal value for

the first half of 2018 Significant M&A deals

included the acquisition of undisclosed stake

in Vinhomes by GIC Pte Ltd (Singapore) at

US$1.3bn and 88% stake acquisition of Happy

Land Project by Vina Oscar Hotel (Vietnam) at

US$688mn There was also an IPO of Vincom

Retail, attracting US$743mn from several

investors from Asia and the U.S

and 3rdin terms of deal value during 1H2018

1H2018 witnessed several M&A in banks,

thanks to the great efforts by the Government

in restructuring phase II of banks Major M&A

deals in Banks and Financial Services included

the acquisition of Techcombank by Warburg

Pincus LLC (U.S.), Vietnam's Asia

Conmmercial Bank (ACB) by Alp Asia Finance

Vietnam Ltd., Prudential Vietnam Finance Co

In terms of number of deal:

being the most active sector for M&A activities with 17 deals or approximately 16% in total number of deals in 1H2018 The upward trend of Vietnam real estate seemed to prolong thanks to growing population and rapid urbanization resulting

in property demands 1H2018 recorded the IPO of Vinhomes, the residential property arm of Vietnamese conglomerate

Vingroup, had priced the country’s biggest equity offering at the top of its

prospective range, raising $1.3bn from GIC

Pte Ltd (Singapore) Remaining deals were the sales of vendor’s shares to new

shareholders

Materials and Financial Services were

among most active industries during 1H2018 Over the years, these sectors often performed steadily in terms of number of deals over the years In addition, 1H2018 recognized increasing number of deals in Financial Services and among those deals were mega deals as

Figure 3: Total M&A Deal Value (US$mn) & Number of Deal by Top Sector, 1H2018

Section 1: M&A Activity Review | The Whole Market

In terms of total deal value:

• In the last 3 years, mega deals valuing over

US$100mn drove M&A activities,

accounting for over 74% of total deal value

but less than 10% of total number of M&A

deals In particular, 2017 recorded 19

mega deals, valuing US$10.19bn Out of

these 19 mega deals, only 3 were domestic

and the rest 16 were inbound deals

Significant domestic deals included 100%

stake acquisition of ANZ Bank Vietnam

Ltd’s Retail Division by Shinhan Bank

Vietnam Ltd at US$240mn and acquistions

of 870-unit residential development in

HCMC by Capitaland at US$177mn

Significant inbound deals included the

53.6% stake acquisition of SABECO by

ThaiBev (Thailand) at US$4.7bn and

acquisition of Vincom Retail JSC by

multiple investors valued at US743mn

• 1H2018 witnessed similar trend, as mega

deals valuing over US$100mn contributed

about 75% of the M&A activities in

Vietnam There were 7 mega deals totaled

US$2.81bn The only domestic deal was

the 98% stake acquisition of Berjaya

Vietnam Financial Center Ltd by Vinhomes

at US$516mn Inbound mega deals

included the acquisition of Vinhomes by

GIC Pte Ltd, Techcombank by Warburg

Pincus LLC

In terms of number of deal

• In 2017, the market saw 262 M&A transactions Small and medium sized deals were the most voluminous There were 73 deals valued within US$5-25mn range, equivalent to 31% of total deal number Small deals valued within US$1-5mn range recorded 62 transaction, equivalent to 23%

of total deal number Following were 22 deals, 21 deals, 19 deals and 11 deals value US$25-50mn, US$50-100mn, more than US$100mn, and less than US$1mn respectively

• 1H2018 carried similar trend with the two most active deal ranges valued at US$5-25mn (21 deals) and US$25-50mn (15 deals) Following were 7 deals, 7 deals, 6 deals and 5 deals value US$25-50mn, more than US$100mn, less than US$1mn, and US$50-100m respectively

Vietnam M&A 2017-2018: Majority of capital flow came from inbound deals

Figure 5: Total Deal Value by Category, 2013-1H2018

Source: StoxPlus

• Throughout the years from 2013 to

1H2018, Outbound deals remained

consistently inconsiderable, with the

portion recorded less than 0.5% of M&A

activities each year

• In 2015-2016, domestic and inbound M&A

were almost balanced, with just slightly

more capital flow from outside the

nation’s borders From 2016 forward,

inbound M&A started to attract increasing

amount of capital The highest value M&A

transactions were usually closed by foreign

investors In fact, inbound M&A made up

87.9% of total M&A deal value in 2017 and

75.3% of the value in 1H2018 Meanwhile,

domestic deals in 2017 accounted for a

humble 11.5% of total M&A only Moving

into 1H2018, Vietnamese investors had

taken more M&A activities, bringing the

portion of domestic deals to 24.4% of total

deal value

• Inbound M&A accelerated fast during 1H2018 The constantly changing economic environment of Vietnam had provided numerous opportunities for foreign investors Vietnamese government had committed to creating a fair and attractive business environment for foreign investors, and constantly improving its legal

2017-framework and institutions related to business and investment The government also worked hard on restructuring the economy and its model for growth, as well

as enhancing national competitiveness Favorable trade policies, and FTAs between Vietnam and other countries altogether enhanced the credibility and transparency in governmental policies As a result, Vietnam had attracted more foreign capital inflows than ever

Value (US$bn)

Volume (deals)

2016 4.91 97

2017 11.79 1471H2018 2.83 40

Section 1: M&A Activities Review

Inbound M&A drove the market during 2017 – 1H2018

Source: StoxPlus

Accumulated inbound M&A deal value into Vietnam since 2013 reached US$26.89bn from 535

transactions The year 2017 hit record with 146 deals valuing US$11.79bn This was a massive jump

compared to the previous year in terms of both deal number and the proportion over total annual M&A deal value in 2016 Inbound deal value in 2017 increased more than double compared to that of

2016 The first half of 2018 had already recorded US$2.83bn from 40 transactions 1H2018 inbound

deals made up 75% of the current period M&A activities These numbers considered humble compared

to the previous year, nevertheless 1H2018 saw more growth in domestic deals

The shift in inbound M&A in 2017 – 1H2018 were the mega deals In these agreements, foreign

investors acquired majority stake in leading Vietnam domiciled enterprises including leading brewery SABECO, real estate conglomerate Vinhomes and Vincom Retail, dairy corporation Vinamilk, Ho Chi Minh City Infrastructure Investment (CII), Techcombank, and Nam Long Investment Corp

Figure 6: Inbound M&A (US$mn) in Vietnam, 2013 - 1H2018

# YEAR ACQUIROR NATION TARGET COMPANY/

ASSET

SECTOR DEAL VALUE

(US$mn)

7 2018 Hankyu Realty &Nishi Nippon Railroad Japan Nam Long Investment Real Estate 306.5

Figure 7: Top 8 Inbound M&A Deals, 2017 – 1H2018

Inbound M&A in 2017: Thailand bulled in

Section 1: M&A Activity Review | Inbound M&A

Figure 8: Inbound M&A (US$mn) Deal by Country 2017

Thai investors boldly put heavy investment in

Vietnam by acquiring leading Vietnam domiciled

enterprises in recently years Particularly,

capital inflows from Thailand recorded only just

4transactions but totaled US$4.9bn,

accounting for 42% of total inbound deal value in

2017 The biggest investment of Thai players

was the 53.6% acquisition of Vietnam’s largest

brewery SABECO by ThaiBev at a record breaking

deal valued at US$4.7bn There was 1 deal in

Basic Resources, the acquisition of Vina Paper

Co Ltd by Berli Jucker PCL valued at US$14.2mn

The 2 remaining deals were both closed by Siam

Cement Group (SCG) SCG eyed on various

industries: Construction & Materials (100% stake

in Vietnam Construction Materials valued at

US$156mn) and Oil & Gas (75% stake in Long Son

Petrochem valued at US$36mn)

Singapore appeared to be a consistent investor

to Vietnam via M&A In 2017, Singapore injected the second highest capital into Vietnam with US$1.79 from 16 deals Real Estate especially caught Singaporean investors' preference with 7 (out of 16) deals with total value of US$443mn Keppel Land was the most active player for acquiring 5 projects in 2017

U.S and Hong Kong had stepped further into

Vietnam M&A market through M&A and with large deals U.S and Hong Kong both invested

in a variety of sectors, with none stood out to

be their major target Hong Kong Land acquired CII, and Kohlberg Kravis Roberts from the U.S acquired Masan Nutri-Science

Japan, South Korea and United Kingdom were

the most frequent investors to Vietnam and lead in terms of deal number However, these investors usually closed small to medium sized deals

From 2017, investors from Thailand and Singapore aggressively seized mega deals and lead in terms of deal value Meanwhile, Japanese and Korean investors even though contributed the most number of deals, but usually just small and medium sized deals (agv size US$23mn and US$24mn respectively)

by multi-investors

Source: StoxPlus

M&A in the first six months of 2018 recorded US$1.33 from 8 deals The most capital flow to Vietnam in 1H2018 were from Singapore and the U.S.

Figure 9: Inbound M&A (US$mn) by Country, 1H2018

Inbound M&A in 1H2018: Singapore increased investment to

be the no.1 investor to Vietnam in terms of value

BY NUMBER OF DEALS

BY TOTAL DEAL VALUE

Capital inflows from Singapore to Vietnam via

M&A spiked up in 1H2018 to reach US$1.33bn

with 8 deals, taking away the first place from

Thailand In addition, Singaporean investors

were particularly interested in real estate In

fact, $1.33bn from disclosed transactions were

all real estate The largest deal seized by

Singaporean bidder was the acquisition of

undisclosed stake in Vietnam’s leading real

estate development conglomerate Vinhomes by

GIC Pte Ltd valued at US$1.3bn However, the

remaining 5 transactions (3 Technology, 1 Real

Estate and 1 Construction & Material) by

Singaporean bidders did not disclose deal value

American investors continued to show their

interest in Vietnam market with the 2ndand 3rdplace in terms of deal value and number, respectively 6 deals valuing at US$464mn in 1H2018 Most of American investors were financial investors, hence highlighting their interest in Banks sector of Vietnam There were 4 mega deals in Banks sector Highest valued deal was the acquisition of undisclosed stake in Techcombank by Warburg Pincus LLC The remaining deals were 9.1%, 5% and 6.5% stake acquisition in Asia Commercial Bank (ACB) by three funds Sather Gate Investment Ltd., Estes Investments Ltd and Boardwalk South Ltd respectively

Japan had consistently appeared to be a stable

investor into Vietnam via M&A in terms of volume Inbound M&A by Japanese bidder totaled US$144mn from 10 deals Despite largest in volume, deal value did not seem to impress Japan bidders did not close any mega deal, instead they opted for small to medium deals The biggest deal was worth US$51mn

Section 1: M&A Activity Review | Inbound M&A

Source: StoxPlus

Capital inflow to Vietnam from Thailand fluctuated over times, hit record by end of 2017, however recorded modest value moving into 1H2018

Investment wave from Thailand

Upon enjoying robust domestic growth and

probably hitting market saturation, Thai firms

had aggressively started expanding business

further across borders via M&A

Vietnam attracted capital inflow from Thailand

as the two countries shared closely related

cultural values and lifestyle, strategic location

within ASEAN community, favorable business

environment from Vietnam’s end such as

foreign-friendly policies, low labor and

manufacturing costs However, Vietnam’s most

prominence had to be the large untapped

consumption market for over 90 million people,

which held tremendous potentials for

consumer-based sectors like Retail or Food &

Beverage

According to StoxPlus’s database, accumlated

capital inflows of Thai firms into Vietnam via

M&A since 2011 reached US$8.88bnwith

total of 32 deals up to 1H2018 Usually there

were less then 7 deals each year Nevertheless,

Thai investors, usually the nation’s top

conglomerates, aimed at mega deals These

mega deals' availability was occasional, hence

explaining the fluctuation over the years in

2017, SABECO’s share price increased by 75% and had P/E ratio of almost 47 times SABECO deal was not only largest M&A deal in Vietnam, but in South East Asia in 2017

Figure 10: Inbound M&A Deal Value & Number of Deals by Thai Investors, 2011 – 1H2018

Perli Jucker acquired Metro C&C

Spotlight: Thailand’s ambition in Vietnam retail

879.0

258.6 2,289.0

Figure 11: Inbound M&A (US$mn) into Vietnam by Singaporean Investors, 2011 – 1H2018

Spotlight: Singapore increasingly invested in Vietnam’s real estate via M&A

The “Asian Tiger” Singapore was most active

cross border investor in the region

Singapore, was particularly active in investing via

M&A across borders, as it was the regional leader

in M&A value M&A activities from Singapore into

Vietnam border since 2011 reached US$5.01bn

from 74 deals in various sectors From 2016 to

current period of 1H2018, capital injected to

Vietnam from Singapore had spiked up especially

through mega deals in real estate Vietnam’s

growing property market grasped Singaporean

investors’ attention As an emerging market,

Vietnam possessed high yielding opportunities

seen less in matured markets Half of the deals

closed in 2017-1H2018 were in real estate (12 out

of 24) Real estate deals within this period were

worth US$1.77bn, equivalent to 68% of total

deal value

2017 had multi sized real estates deals, however

the largest deal turn out to be in Food & Beverage

sector valuing US$616.6mn It was the 10.3% stake

acquisition of Vinamilk, Vietnam’s largest dairy

company by Jardine C&C There were 8 real

estate deals altogether valuing US$443.13mn

1H2018 had only 3 deals that disclosed value All of them were real estate deals With total value of US$1.33bn, 1H2018 officially became a landmark year for inbound M&A in the property sector even before the year concluded The first half of

2018 had already recorded deal value greater than any year in the past The single deal that heat up inbound real estate M&A from Singapore was the US$1.3bn

acquisition of Vingroup’s subsidiary Vinhomes, Vietnam’s largest developer, by GIC Pte Ltd, the sovereign wealth fund established by the Government of Singapore

to manage Singapore's foreign reserves GIC was no stranger to Vietnam’s market, having already acquired stakes of Vietnamese key player businesses

Before the Vinhomes deals came through, GIC Pte Ltd already held 5% stake in Masan Group, 5.5% in VietJet, 0.7% in Vinamilk, and 3.5% in FPT Its total holdings reached

a total value of US$658.6mn (for disclosed deals amount only) GIC is also looking at a potential acquisition in Vietcombank when this bank plans to issue additional 10% stake via private placement in 2018

Capital inflows to Vietnam from Singapore escalated quickly since the end of 2016, and hit recorded

8

0 2 4 6 8 10 12 14 16 18

Section 1: M&A Activity Review | Inbound M&A

Spotlight: U.S interested in investing in various sectors

The United States had been more active in Vietnam’s M&A market since the downturn in

investment in 2015-2016 Since then, the U.S ranked 3rdand 2nd in terms of deal value of M&A into Vietnam in 2017 and 1H2018 accordingly Inbound M&A from the U.S in 2017 totaled

US$1.62mn in value in from 11 transactions Overall, American firms invested in a wide range of

deal sizes: 4 deals valued more than US$100mn, 2 deals valued US$50-100mn, and 2 deals valued less than US$25mn and 5 deals’ value remained undisclosed

The number of deals from the U.S were modest, but the deal value were not For the first half of

2018, American firms had injected more capital into Vietnam via M&A in various There were a few IPOs of big Vietnamese banks in 2018 like Techcombank and Asia Commercial Bank that attracted American investors These were the highest valued deals from the U.S American firms also made large investments in other sectors such as Food & Beverage, Industrial Goods & Services and Real Estate

Year Acquiror name Target company/ asset % Stake acquired Type Deal value

(US$ mn)

14 11

4

0 2 4 6 8 10 12 14 16

Source: StoxPlus

Figure 13: Inbound M&A Activities (US$mn) by Top Sector

Inbound M&A: Sector Analysis

BY NUMBER OF DEALS

BY TOTAL DEAL VALUE

In 2017, in terms of deal value, the sectors attracted the most capital were Food & Beverage

(US$6.05bn), Real Estate (US$2.81bn), Construction & Materials (US$625mn) and Industrial Goods & Services (US$592mn Regarding number of deals, the most favored sectors for Inbound M&A in 2017 were Real Estate (23 deals) Industrial Goods & Services (20 deals) Food & Beverage (13 deals) and Ultilities (10 deals) Overall, inbound M&A activities spread across a variety of industries and

sectors, with some more active than the others

Food & Beverage sector had a thriving year in 2017, whereas ThaiBev from Thailand, acquired

53.58% stake (previously State owned) of Vietnam’s largest brewery SABCEO Total value of this rare deal hit record at US$4.7bn from a single transaction

Other sectors that highlighted 2017-1H2018 were Real Estate and Banks with a few mega deals

Construction & Materials

Industrial Goods &

Services

Banks Healtcare

Personal & Household

207

76510

Food & Beverage Real Estate Construction & Materials Industrial Goods & Services

Banks Healtcare Personal & Household Goods

Financial Services Ultilities

Section 1: M&A Activity Review | Inbound M&A

Source: StoxPlus

• M&A in F&B market saw a shift in preference from packaged food in previous years to beverage Vietnam was forecasted

to placed in 3rdplace amongst the Asian region for Food & Beverage’s consumption rate Food & Beverage sector in Vietnam would be an outperformer over the forecast period because of its positive demographic trends, foreign brand preference, rising incomes, robust economic growth and rapid expansion in the retail sector will drive growth and development in this sector

• The government had started divesting stakes in several major SOEs This year saw the largest deal from the state owned capital divestment of SABECO – the brewery with largest market share, approximately 40% It was expected that more SOEs would follow this path A few SOEs in Food & Beverage industry had officially announced its divestment plan such as HABECO, Vinacafe, Vinafood 1, Vinafood 2, etc

• Food & Beverage’s potentials were shown by a

variety of factors such as: (i) growing population

(close to 100 million population) with average

annual growth rate of 1.2%; (ii) large citizens (68%

or 60,7 million people that less than 40 year of

age); (iii) high urbanization growth rate

-achieved 35,7% in 2015; (iv) rising income per

capita and higher living standards

• Amongst inbound M&A total deal value of year

2017, Food & Beverage accounted for nearly 51%

and valued at US6.05bn 2017 also witnessed the

highest value ever recorded since 2011, which was

the acquisition of 53.59% stake in SABECO by

ThaiBev valued at US$4.7bn It was not expected

that 1H2018, and probably a few years later to

score a similar sizable deal So far of 1H2018,

there was obviously a decline: only 2 deals valued

at US$21mn The mega deals of 2017 were from

Thailand (SABECO deal valued at US$4.7bn) and

Singapore (Vinamilk deal valued at US$1.2mn),

the United States (Masan Nutri-Science deal

valued at US$150mn)

Figure 15: Inbound M&A Activities (US$mn) in Food & Beverage, 2011 – 1H2018

Inbound Spotlight: Food & Beverage

INBOUND M&A IN F&B

Inbound Spotlight: Banks and Financial Services

Foreign investors banks were aggressively tapping on domestic finance related services

Accumulated foreign capital injected to Vietnam through M&A in banks since 2011 totaled

US$3.07bn through 21 deals After quiet years from 2013 to 2016, Banks sector started to heat up in inbound M&A market again Finance related sectors were luring in numerous domestic and

international investors because of the attractiveness of the rapidly developing consumer finance

market

Notable mega transactions in Banks were the takeover of Techcombank, Asia Commercial Bank and Bank of China Ltd Financial Services sector also scored mega deal with Prudential Vietnam Finance

Source: StoxPlus

Figure 16: Inbound M&A Activities (US$mn) in Banks, 2011 – 1H2018

Banks sector was on the rise since the beginning of 2017, and so far performed well during the first half of 2018.

Inbound Banks 1H2018

2011-US$3.07bn

21 Deals

Year Acquiror name Target company/ asset % Stake acquired Type Deal value

(US$ mn)

7

3

0 1 2 3 4 5 6 7 8

Section 1: M&A Activities Review

Domestic M&A 2017 - 1H2018: Real estate and F&B were the most attractive for M&A to domestic investors

Figure 17: Domestic M&A Total Deal Value (US$mn) & Deal Number, 2011 – 1H2018

Source: StoxPlus

Figure 18: Domestic M&A Deal Value (US$mn) by Top Sector

1H2018 2017

Accumulated domestic M&A value since 2011 recorded 1318 deals valuing US$16.88bn Domestic M&A

activities had been declining a since 2016 Nevertheless, year 2017 and 1H2018 saw an increasing number of mega deals Deal value and volume of 2017 from domestic M&A decreased in terms of

absolute value In particular, 2017 recorded US$1.55bn from 61 transactions, making the average cost

per deal approximately US$25mn, higher compared to approximately US$2mn of the same figure in

2016 The first half of 2018 recorded US$918mn from 58 deals.

The most active sectors for domestic M&A in 2017- 1H2018 were Real Estate and Food & Beverage For two consecutive years, Real Estate topped chart as the most active sector in domestic M&A market Particularly, Real Estate deals made up 64% of total domestic M&A activities in 2017, and 41% in 1H2018

Domestics M&A 1H2018

1,551

918

295 205

98 154

61

58

0 50 100 150 200 250 300 350

Food & Beverage

Industrial Goods &…

Retail Basic Resources Industrial Goods & Services Construction & Materials

Media

Domestic Spotlight: Domestic real estate heat up

Figure 19: Domestic M&A Deal Value (US$mn) & Deal Number, Real Estate

Section 1: M&A Activity Review | Domestic M&A

2017

Real Estate was the dominating sector among domestic M&A in 2017-1H2018 In 2017, Real Estate was relatively active with 16 M&A deals, valuing US$ 647 mn even though still much lower that of previous year in 2016 Since 2016 hit recorded in real estate domestic M&A, 2017 and 1H2018 failed to carry on this upward trend Nevertheless, 2017 was a very active year for M&A in real estate for both inbound and domestic M&A In 2017, domestic real estate was over dominated by that of inbound value (16 deals valued at US$647mn for domestic, and 23 deals valued at US2.81bn for inbound) So far 1H2018 recorded US$593mn from 8 deals It appeared that 1H2018 domestic M&A in real estate was also not as active as inbound M&A of the same category

Overall real estate remained one of the most attractive industry for domestic investors Most of

domestic M&A in real estate were the acquisitions of on-going or delayed projected that needed more capital Domestic M&A in Real Estate saw three mega deals valuing US$100mn or over in 2017, and only one in 1H2018

16 8

0 5 10 15 20 25 30 35 40 45 50

Domestic Spotlight: Food & Beverage shrank in deal size and volume

Figure 21: Domestic M&A Activities (US$mn) into Vietnam in F&B

Source: StoxPlus

Food & Beverage continued to be attractive to domestic investors, despite currently being on a decrease trend from 2015

2017-1H2018 recorded deal value from domestic M&A in Food & Beverage sector as the second

highest within domestic M&A, although it fell way behind the highest sector Real Estate in terms of

deal value In 2017, there were 19 deals valued at US$254mn The most current period proved to be

as much active since 1H2018 recorded 9 deals valued at US$116mn

Some domestic players looked to expand their business via M&A Masan Beverage expanded their

portfolio to coffee through the acquisition of Vinacafe Bien Hoa Vinamilk had long wanted to enter Sugar industry, since sugar and dairy were retable goods therefore it acquired Khanh Hoa sugar Bien Hoa Sugar and Thanh Thanh Cong Tay Ninh Sugar partnered up and acquired HAGL Sugar Kinh Do Corp wanted to expand their product line into completely different sectors like cooking oil and spice through the acquisition of Vocarimex Vietnam was a populous market of over 90 million people, and increasing disposable income, consumer-based sectors like Food & Beverage would continue to be stable and demanding Food & Beverage sector in 2017 and 1H2018 saw dominating number of

inbound deals, hence implying that foreign investors were much more aggressive than domestic

investors in this sector There was not any mega deal from Food & Beverage domestic M&A from the current period Domestic M&A in Food & Beverage was mostly made up of small to medium sized

deals

Year Acquiror name Target company/ asset % Stake acquired Type Deal value

(US$ mn)

190

141 57 205

37

21 19

9

0 5 10 15 20 25 30 35 40

Domestic F&B M&A 2011- 1H2018

US$3.07bn

21 Deals

Section 1: M&A Activities Review

Source: StoxPlus

Outbound M&A activities were quiet in 2017 with only 3 deal valued at US$61mn However 1H2018 saw zero outbound deal.

Outbound M&A: Insignificant capital outflow

Outbound M&A by Vietnamese companies to

be silent in 2016 & 1H2017

M&A across the borders by Vietnamese firms

were still very insignificant compared to

domestic and inbound M&A during 2017 –

1H2018 Domestic firms had not been actively

expanding overseas through M&A Outbound

M&A usually accounted for less than 1% of total

M&A From 2011 to 1H2018, there were only 13

deals valuing US$366mn After several inactive

years, 2017 heat up outbound M&A with the

49% acquisition of Angkor Milk (Cambodia) by

Vinamilk valued at US$11mn

Our sources (both public and intelligent data)

had yet to record any M&A oversea by domestic

firms for 1H2018

The theme of their strategy notes this year

was “to focus on home market and untapped

segments”, “exits of non-core investments”,

“time for restructuring” and “cost

reduction”.

Nevertheless, Vietnamese corporations are still active in pursuing investments oversea via foreign direct investment channel instead

According to Department of Foreign Investments within MPI, there are 102 licenses with total investment capital of US$900mn granted to Vietnamese investors Largest investors oversea are still Petrol Vietnam, Viettel , Vietnam Rubber Group, Song Da Group, BKAV and Kymdan

Section 2: M&A Themes 2017 – 1H2018

SOE IPOs in 2017-1H2018 were modest in terms of volume

Although Vietnamese government was fully committed to equitization and experienced such aggressive period 2013-2016, the process in 2017-1H2018 has lost its strong momentum The number of IPOs in 2017 and 1H2018 were very modest with just 21 and 16 successful IPOs respectively.

Figure 23: Number of successful IPOs of SOEs in 2012-1H2018

1232/QĐ-However, the first half of 2018 only recorded 16 successful It is unlikely that 2018 SOE IPOs will match its IPO schedule drafted by the government In the first half of 2018, successful auctions of 16 SOEs sold nearly 46% charter capital to strategic shareholders, raising approximately US$965mn, about 4.5 times more than the proceeds from the IPO of all year 2017

The progress of IPOs during 2016 to 2018 was also significantly less aggressive than in the previous period since 2012 to 2015 The peak of SOE IPOs was during 2014-2015 where the number of SOEs holding IPOs reached triple digits, specifically 148 and 128 respectively However, since the end of

2015, SOE IPOs slowed down Some SOEs were huge with a hefty amount of assets and complex asset structure, therefore requiring a long time to prepare for IPO Aside from large profitable businesses that mostly already held IPOs in the previous years before 2017, the remaining companies that have yet to equitize were public utilities, unprofitable business, or small businesses operated in industries less attractive to investors There were also many SOEs swamped in piles of debt, making the asset valuation process extra complicated There were even cases of “good” SOE deliberately refused to cooperate with the consultancy, by omitting and hiding the essential information such as property advantage, as a result prolonged the IPO process

Vietnam government raised US$6.25n from state capital

divestment in 2017 – 1H2018

Section 2: M&A Themes 2017 – 1H 2018| SOE IPOs & Divestment

Some of the highest valued deals closed in 2017 – 1H2018 were SOE divestments According

to StoxPlus database, state capital divestment in 2017-1H2018 raised US$6.25bn in total of which, US$6.06bn was from inbound M&A These SOE divestment adds up foreign reserve and lowers State’s budget deficit for the government

The Saigon Beer Alcohol Beverage Corp sold 53.6% stakes to

The brewery was one of the first major firms up for

divestment amid a large-scale plan by the Vietnamese

government to privatize many state-owned firms and it was a

resounding success SABECO was the major player in

Vietnam’s beverage market for owning 40% market share and

had the largest distribution channel in Vietnam Many had

eyed on SABECO and the winning bidder was ThaiBev from

Thailand SABECO deal was the highest valued deal in

Vietnam, and South East Asia in 2017

Vietnam Dairy Products JSC sold 10.3% stake to Jardine

Vinamilk was the largest dairy corporation in Vietnam who

owned 58% of market share in Vietnam's dairy market Jardine

C&C paid US$1.15bn for 10.3% stake in the Vietnamese dairy

giant Jardine C&C was an investment holding company from

Singapore, engaged in a variety of sectors The acquisition of

Vinamilk was in line with the Jardine C&C group's strategy of

investing in market-leading companies in the region

divestment of many sectors Notable deals included:

• 25% stake acquisition of PetroVietNam Low Pressure Gas

Distribution by Tokyo Gas (Japan) at US$49mn

• 15% stake acquisition of Tien Phong Plastic by Sekisui

Chemical (Japan) at US$44mn

• 65% stake acquisition of Khanh Hoa Sugar by Vinamilk

• 20% stake acquisition of Petrolimex Insurance by Samsung

Fire & Marine Insurance (South Korea) at US$24mn

SCIC (State)FnS (Singapore)Jardine C&C (Singapore)Foreign investorsDomestic investors

2017-1H2018 saw IPOs of SOEs from various sizes

Figure 25: Top 20 SOE IPOs by Charter Capital IN 2017-1H2018

NO GOVERNING

BODY INDUSTRY (ICB LEVEL 2) COMPANY

CHARTER CAPITAL(US$MN)

19 Da Nang Industrial Goods & Services VanTuong Investment Structure 6.87 59.97% 59.97%

Top 2017- 1H2018 SOE IPOs by charter capital are from SOEs of various industries: Oil & Gas,

Industrial Goods & Services, Food & Beverage and Construction & Materials Although evidently shown that consumer-based sectors attract the most M&A, industrial sectors still hold many

potentials

Apart from successful SOE IPOs, some SOE IPOs in the reviewed period were not unsuccessful as shares offered were not completely sold such as cases of Vinalines, Becamex IDC, Song Da, Dakruco, Dowasen Unsucessful IPOs stemmed from many reasons such as too high valuation, strict

requirement for bidders, low shares offered, or unprofitable businesses

Source: StoxPlus

Section 2: M&A Themes 2017 – 1H2018