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M&A helps real estate companies raise more capital |
When commercial banks moved to tighten credit flows into real estate and the capital market (bonds and securities) faced many difficulties, many real estate companies thus find merger and acquisition (M&A) can help them mobilize money.
The M&A market in Vietnam in 2022 decreased sharply compared to the previous year; specifically, in the first 10 months of 2022, it decreased by 35.3 percent compared to the same period in 2021. However, deals in the real estate sector still recorded the highest value in the past 5 years.
The big deals can be mentioned such as a domestic real estate company acquiring Capital Place - a Grade A office building located in the center of Hanoi, worth US$550 million or an M&A deal between Novaland Group and Tai Nguyen Construction, Production and Trading Company worth $1 billion.
Besides, the famous M&A deals with the participation of foreign enterprises in 2022 were US private equity fund Warburg Pincus investing US$250 million in Novaland's Tropicana resort; plus, two investment funds VinaCapital and Dragon Capital's announcement to pour $103 million into Hung Thinh Land.
Many experts believe that in 2023, amid the central bank’s tight money policy, the corporate bond market cannot immediately deal with internal problems and the stock market still cannot increase strongly, M&A will still be a channel to provide capital that real estate businesses will aim for in the near future.
Ms. Duong Thuy Dung, Senior Director of CBRE Vietnam, said that joint venture, association and cooperation with foreign partners is a new trend in domestic real estate enterprises, instead of depending on bank loans or issuing bonds. Along with that, the association with financially strong companies with good experience in project development will help domestic enterprises improve their capacity to develop projects and attract new customers.
According to Mr. David Jackson, General Director of Colliers Vietnam Real Estate Services Company, M&A activities will help rescue domestic developers. Moreover, foreign investors also want to pour money into Vietnam's real estate market as they believe in the potential of the market.
Deputy General Director of KPMG Vietnam Nguyen Cong Ai said that the real estate market will remain relatively quiet, but this is an opportunity for investors with cash to buy attractive projects. Senior Director of Savills Vietnam Group Su Ngoc Khuong also assessed that, in 2023, the capital demand for real estate projects is very huge, accompanied by rapid urbanization, which will make the M&A deals light up the property market.
Along with that, the Law on Land, the Law on Housing, the Law on Real Estate Business, and the Law on Bidding will be amended and supplemented with many major changes. With the increasingly perfect legal environment, the real estate market is expected to welcome large M&A deals.
