Enterprises pursue M&A and divestment deals to alleviate cash crunch

Phát Đạt Real Estate is expected to collect over VNĐ1.4 trillion from the sale of its all stake in BIDICI Real Estate Investment. — Photo phatdat.com.vn

Compiled by Ly Ly Cao

Divestment and mergers and acquisitions (M&A) are serving as crucial lifesavers for numerous businesses amidst an extended period of blocked capital flow.

Prominent entities such as Development Investment Construction JSC, Vinaconex, Phát Đạt Real Estate Development JSC, Hòa Bình Construction Group JSC, Nam Long Investment Corporation and VRC Real Estate and Investment JSC, among others, have strategically divested from subsidiaries, affiliates and liquidated assets to stabilise their cash flows.

Hòa Bình Construction successfully offloaded its total stake in the subsidiary, Hòa Bình Construction – Design Consultancy Co., Ltd. It also fully divested its holdings of 32.31 per cent and 47.82 per cent in its affiliates, Anh Việt Mechanical and Aluminum Glass Corporation and Jesco Hòa Bình, respectively.

Nam Long Investment recently finalised the transfer of a 25 per cent stake in the Nam Long Đại Phước project (spanning 45 hectares) to partner Nishi Nippon in June, generating nearly VNĐ200 billion (US$9.4 million) in profit after tax.

Similarly, VRC Real Estate effectively transferred a segment of the ADC residential area in Phú Mỹ Ward, HCM City.

Phát Đạt Real Estate said that the complete sale of its 49 per cent stake in BIDICI Real Estate Investment JSC is nearly wrapped up, presenting the company with an opportunity to accrue over VNĐ1.4 trillion to stabilise its capital flow.

Vinaconex completed divesting its stake, which worth nearly VNĐ199 billion, in Vân Ninh International Port. Hải An Transport & Stevedoring JSC plans to exit Lưu Nguyên Cái Mép Port Services JSC (51.54 per cent stake, VNĐ124 billion).

Other firms like Trung Nam Group, Sam Holdings and Vietnam Airlines are divesting from subsidiaries.

SGI Capital emphasises that divestment strategies and asset sales are key for large enterprises to focus on core business areas and sustain profit growth.

On the other hand, over recent months, the real estate and construction sectors have witnessed a flurry of M&A transactions.

In real estate, M&A is crucial for firms facing a cash crunch. Deals focus on projects with legal clarity and growth potential, expected to escalate in the year’s end. Industrial real estate is set to attract foreign direct investment (FDI) from significant M&A transactions.

Despite passing the peak of liquidity challenges, ongoing market pressures will hinder businesses from capitalising on low interest rates.

In late 2024, companies in need of debt restructuring must navigate liquidity risks and consider increased divestments and M&A to maintain stock prices and retain major shareholders.

In addition, experts highlight that real estate M&A now is more than just asset accumulation, it has become a strategic move to enhance businesses’ market competitiveness.

The focus has shifted from initial competition and confrontation to investment and collaboration, aiming to create shared value for progressive development.

The second quarter APIQ report by Savills showed significant M&A transactions in the real estate domain, Kim Oanh Group (Việt Nam) joined forces with NTT Urban Development, Sumitomo Forestry and Kumagai Gumi Co Ltd (Japan) to develop The One World, a sprawling 50-hectare residential complex in Bình Dương Province.

Another noteworthy deal involved Nishi Nippon Railroad (Japan) acquiring a 25 per cent stake in the 45.5-hectare Paragon Đại Phước project from Nam Long Investment (Việt Nam) for around $26 million.

In the realm of industrial real estate, Tripod Technology Corporation recently finalised the acquisition of an expansive 18-hectare industrial land parcel in Bà Rịa-Vũng Tàu Province from Sonadezi Châu Đức.

Nguyễn Văn Đính, deputy chairman of the Vietnam Real Estate Association, said that the M&A approach swiftly introduces real estate products to the market, alleviating supply shortages and aligning with the Government’s call to lower housing prices.

Experts anticipate a surge in real estate M&A activities in the latter part of this year. These transactions will be propelled by both domestic and international enterprises.

Beyond industrial and residential real estate sectors, commercial office spaces and tourism properties are garnering significant investor attention. — VNS