F&B Remains Most Enticing Industry for PE Investors in Vietnam: Grant Thornton

Tuan Minh

09:59 29/08/2016

BizLIVE - Food and beverage and Retail in Vietnam remained the two most enticing industries for private equity investors.

F&B Remains Most Enticing Industry for PE Investors in Vietnam: Grant Thornton

Food & Beverage continued to be the most attractive sectors to private equity investors in Vietnam. Photo: Internet

Food & Beverage (F&B) and Retail continued to be the two most attractive sectors to private equity (PE) investors in Vietnam, a survey by Grant Thornton showed.
“These industries benefit from Vietnam’s robust growth in consumption, which is not only thanks to population growth but also in terms of rising income,” says the survey.
Among successful deals, Wrap&Roll raised $6.9 million, Kafe Group $5.5 million, Huy Vietnam $15 million and Golden Gate $35 million.
Value sales of the catering industry is forecast to increase at CARG 5.9% from 447 trillion dong ($20 billion) in 2016 to 562 trillion dong ($25 billion) in 2020, according to a Euromonitor report on May 2015.
Source: Grant Thornton Vietnam. 
Retail sector still remains one of the top attractive industries for PE investors. E-commerce is a new trend in the retail sector. Although e-commerce only accounted for under 3% of retail in 2015, the segment grew 37% in the last year and is forecast to gross $10 billion by 2020.
The survey found out that 56% of respondents said they expected to be net buyers over the next 12 months, up four percentage points from the last survey. The percentage of respondents expecting to be net sellers fell to 9% from the previous 21%.
With regards to deal origination, “private/family owned entities” have replaced “SOE privatization” as the top option, chosen by 33% of participants. The percentage of participants perceiving “SOE privatization” as a highly sought-after source diminished from 46% in the last survey to 29% in this survey.
Delays in state-owned enterprise (SOE) privatization has left investors with a reduced interest. In addition, stakes offered in IPOs in SOE privatization are much lower than expectations of PE investors, being under 5% in many cases.
Therefore, private/family owned companies with management holding controlling stakes and being directly tied to the company’s performance are now more attractive to investors than SOEs.
When it comes to key deal success factors, “Economic growth” continued to be an advantage for Vietnam against other destinations.
Despite the slow down in GDP growth in the first half of 2016, other aspects of the Vietnam economy still showed growth including imports and exports, rising foreign investment, several FTAs boosting economic growth, etc.
Vietnam’s growth is also driven by growing domestic consumption, high population density, and rapid infrastructure development.
Source: Grant Thornton Vietnam.
On the other hand, “Difference in valuation expectations” is the most critical issue that could break the deals. It is followed by “Non-disclosure of material items at the appropriate time” and “Changing the deal.”
Source: Grant Thornton Vietnam.



Từ khóa: Grant Thornton