The firm's fifth annual Global Transactions Forecast, jointly released with Oxford Economics, projects that mergers and acquisitions (M&A) will decline globally from 2.8 trillion USD in 2019 to 2.1 trillion USD in 2020. The forecast also predicts a downward trend in IPO proceeds from an estimated 152 billion USD in 2019 to 116 billion USD, a 23 percent drop.
For Vietnam, the forecast expects GDP growth may ease over the next 18 months, due to export growth trends declining amid lower Chinese import demand and increased global protectionism. Currently, Vietnam's average annual GDP growth of 6.2 percent is higher than the global average of 2.8 percent.
Baker McKenzie expects cross-border acquisitions to dominate M&A deals in the coming years, as the country's solid social economic fundamentals continue to attract overseas investors. "Vietnam remains active in M&A right now, due to positive market factors and confidence that help create business opportunities, as well as multilateral agreements that continue to prompt regulatory reform," said Seck Yee Chung, who heads Baker McKenzie's M&A practice in Vietnam.
Vietnam, Thailand and Indonesia were identified in the report as Asian countries that saw strong inbound activity in 2019. This year's largest cross-border signed inbound deal in the country was the Republic of Korea’s chips-to-energy conglomerate SK Group’s 1 billion USD investment in Vingroup –Vietnam's largest firm.
This was followed shortly by RoK-headquartered Hana Bank's purchase of a 15 percent stake in the Bank for Investment and Development of Vietnam (BIDV) worth 850 million USD. The RoK is the largest source of foreign direct investment in Vietnam, as the latter has become a production base for major Korean multinationals such as Samsung and LG.
Despite continued interest from investors, Vietnam may experience a decline in M&A, as total transactions will dip from 2.6 billion USD in 2019 to 1.7 billion USD in 2020, a 35 percent decrease. In IPOs, the report did not post any estimates for 2019-2020.
Looking ahead, the report predicts that activity will pick up again post-2020, as Vietnam remains an attractive market./.
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