Kim Ja Jum, deputy CEO of Kiwoom, the securities company with the largest brokerage market share in South Korea, visited Hanoi in early November to attend a forum on Vietnam-South Korea economic cooperation.
His mission was to seek more opportunities to invest in Vietnam’s SMEs through M&As.
Kim said his company would invest $25 million in one SME to hold a controlling stake.
“We are targeting production companies, because there are two strategies being followed by South Korean companies – either buying materials in Vietnam and making products in South Korea to sell back to Vietnam, or setting up production bases in Vietnam to make products to sell in Vietnam and ASEAN countries,” he said.
Along with Kiwoom, 13 South Korean investment funds also visited Vietnam to seek investment opportunities.
Michael Dc Choi from KOTRA revealed that South Korean investors are negotiating with 12 Vietnamese companies in the fields of pharmacy, food and fintech, and if things go smoothly, the deals will be completed in half a year.
Analysts said the big interest from South Korean investors in Vietnamese SMEs showed a new tendency in the M&A market.
In the past, foreign investors only eyed large private companies or SOEs which were under equitization. But now, they also can see opportunities from SMEs.
Jacob Won, CEO of Locus Capital, said after a period of strong development, South Korean companies are tending to expand their business outwards.
Vietnam, a familiar market which has been surveyed by large corporations, is one of the best destinations for smaller South Korean investors.
Japanese companies are also hunting investment opportunities.
Shosuke Mori from Sumitomo Mitsui said the Vietnamese market had become more attractive to Japanese investors thanks to the high percentage of people of working age and the geographical position near the markets of China and Thailand.
FIA said that FDI registered in Vietnam reached $4.7 billion in the first 10 months of the year and it is expected to exceed $5 billion this year.
Capital is ready to be disbursed for Vietnam’s SMEs. In South Korea, Won said 14 institutions and investment funds which have $1 billion are getting ready for M&A deals in Vietnam.
However, Won said that South Korean investors were worried about the lack of transparency in financial reports of Vietnamese companies.
An analyst said that Vietnam SMEs are still weak in corporate governance and business planning, while information about their business is lacking. These shortcomings make it difficult for them to access bank loans.