Merger and acquisition (M&A) activity in Vietnam will strongly develop especially in sectors of finance, real estate, media, pharmaceuticals, and retail in the next two years given global economic recovery, experts said here on Monday.

Ian Lydall, CEO of PricewaterhouseCoopers Vietnam, told an M&A conference that the number of M&A cases had strongly increased recently with up to 60 cases settled in the fourth quarter last year. However, due to global financial crisis that has choked off the cash flow in foreign countries, the value of M&A deals had fallen, from US$400 million in the third quarter last year to less than US$100 in the second quarter this year.

Since 2006, there have been many successful M&A deals especially in small and medium enterprises. Most of big deals were in the financial sector such as HSBC acquiring a 15% stake in Techcombank, Maybank buying a 15% stake in An Binh Commercial Bank, and PetroVietnam seizing a 20% stake in Oceanbank.

Explaining why the M&A activity can strongly develop in the coming time, Andy Ho, managing director of VinaCapital, said that Vietnam’s potential was still big and many foreign companies wanted to invest here due to stable politics, young and sizeable population, convenient geographic location, and plentiful material sources.

Ian from PricewaterhouseCoopers said that equitization of State-owned companies, which had been accelerated again, would be a good opportunity for foreign investors to buy in good companies. In addition, State-owned companies would want to invest in sectors out of their core businesses to get profit, which would help M&A activity develop also.

Cao Sy Kiem, chairman of the Association of Small and Medium Enterprises, said since late last year, many small enterprises faced difficulties so the M&A activity, which brought capital from other enterprises, was a chance for them to restructure their companies and survive the hard time.

In addition, that would be opportunities for strong companies to buy into others at low price and the investment would increase after the crisis.

However, according to PricewaterhouseCoopers, the biggest challenge for the M&A activity in Vietnam was legal issues and risks from unprofessional companies who want to sell their stakes. Legal procedures usually are time-consuming for investors. In addition, bad management of small enterprises, and the lack of transparency in companies’ operations are also hindrance to the development of the M&A activity in Vietnam. (vietnam stock market news)