Acquiring a series of Vietnamese giants, billions of dollars in profits fall into the hands of Thai tycoons

Thai people bring billions of dollars to "shop" for shares of Vietnamese enterprises

The news that a foreign giant is negotiating to spend 1.5 billion USD to buy assets of a Vietnamese real estate company has attracted public attention.

The story became more notable after Minister of Planning and Investment Nguyen Chi Dung made a statement: Many businesses had to sell almost all of their assets, “what could be sold was sold, and sold at only 50% of the real price”. Mr. Dung emphasized that the buyers were “all foreigners”.

The acquisition/planning to acquire Vietnamese enterprises by foreign corporations, including those from Thailand, Japan, and Korea, is no longer a new issue. Such waves of mergers and acquisitions began more than 10 years ago.

However, the emergence of this wave has made many people worried when now only Thai people own a series of leading manufacturing enterprises in Vietnam. They hold the stocks of "Vietnamese chickens that lay golden eggs" after a decade of "shopping" for shares of Vietnamese enterprises.

Currently, Thai corporations own many leading manufacturing enterprises in Vietnam and collect billions of dollars in dividends from these "money printing machines".

In 2017, investors were abuzz with the ThaiBev deal of Thai billionaire Charoen Sirivadhanabhakdi spending nearly 5 billion USD to own approximately 54% of the shares of Saigon Beer Alcohol Beverage Corporation (Sabeco) and turn Vietnam's number 1 beer brand into a foreign company.

What many foreign corporations care about is cash flow and businesses with good cash flow. Sabeco is such a business.

Thai businesses take over many fields. (Photo: D.Anh)

Sabeco is still the leading beer brand in the domestic market and regularly “prints money” for the Thai people. According to information from Sabeco, the company plans to pay an additional special dividend of 15% for 2022, thereby increasing the total dividend to 50%. The major shareholder from Thailand, Vietnam Beverage, will receive more than 1,700 billion VND.

About a decade ago, Thailand’s SCG Group began acquiring Binh Minh Plastics (BMP), one of the largest companies in the plastic pipe manufacturing and distribution sector in Vietnam. After the state divestment in March 2018, Nawaplastic held 49.9% of BMP’s shares and later increased its stake to 55%.

In 2022, BMP will spend almost all of its profits on dividends at a rate of 84%. Thai shareholders are estimated to receive more than 370 billion VND. Over the past decade, SCG may have collected thousands of billions of VND in dividends from Vietnamese enterprises.

At Vinamilk, Thai shareholder Fraser & Neave currently holds a total of more than 20% of the capital at the leading dairy enterprise in Vietnam. In 2022, Fraser & Neave will earn more than VND 1,600 billion. With an average dividend rate of about 50%/year, to date, the Thai giant has earned a total of about VND 12,000 billion in dividends.

Owns many leading manufacturing companies

Every year, Thai people acquire more leading enterprises in many fields. These are all potential enterprises, mostly in the manufacturing sector with stable cash flow or in the retail sector, the output for products.

After the famous names Binh Minh Plastics, Bien Hoa Packaging (SVI), Ngoc Nghia Plastics - a leading packaging company has also been acquired by a Thai investor. To date, TCG Solutions of Thailand holds 94% of SVI shares. Indorama Venture, also of Thailand, holds about 98% of Ngoc Nghia Plastics.

At the 2023 Annual General Meeting, SHB Bank said that the deal to sell the finance company to a Thai for trillions of dong has been completed. SHB is carrying out the final administrative procedures. It is expected that in May, the partner will pay 50% of the deal value.

Previously, investors witnessed Central Group - a corporation owned by the Chirathivat family - acquiring 49% of shares of the unit that owns the famous electronics supermarket chain Nguyen Kim in 2015. After that, the group's ownership ratio increased to 100%. In addition, the Thai group also acquired the Lan Chi supermarket chain - a brand that operates mainly in rural areas of Vietnam.

Central Group successfully acquired Big C Vietnam from Casino Group (France) in a deal worth 1 billion USD.

TCC Group - another Thai giant operating in the retail sector in 2016 spent 655 million euros to acquire the wholesale chain Metro Cash & Carry Vietnam (now renamed MM Mega Market).

Thai people expand retail system in Vietnam. (Photo: TH)

Not only large corporations, many large investment funds in Thailand are also investing in Vietnamese stocks such as: Kasikorn Asset Management, Principal Vietnam Equity Fund, Bualuang Vietnam Equity Fund, Asset Plus Vietnam Growth RMF Fund, Asset Plus Vietnam Growth Fund... They invest in leading stocks such as: VCB, ACB, MWG, FPT, HPG, VRE...

Recently, with the development of supporting products for the stock market such as depository receipts (DR), Thai individual investors can also indirectly invest in Vietnamese stocks.

In fact, foreign capital flows directly (FDI) or indirectly (FII) into a country like Vietnam are warmly welcomed. FDI enterprises even receive many incentives. Foreign capital flows help implement projects, build factories, enterprises... thereby creating jobs and increasing the economic scale of the local economy.

However, the foreign capital sale deals in leading manufacturing enterprises have raised concerns. Vietnam's already weak manufacturing sector could become more fragile.

With strong financial potential, many foreign corporations are willing to spend a lot of money to hold potential manufacturing and business sectors in Vietnam such as plastics, energy, retail, construction, pharmaceuticals, etc.

While many FDI enterprises are growing rapidly, and foreign-owned listed enterprises are increasingly dominating the market, most domestic enterprises are still very small in scale. Many large domestic private corporations have struggled with difficulties throughout the past year.

This is really worrying.