Say hello to the new Maharajahs: India is the next luxury hub

For a decade, China has been the engine for global luxury growth. China now accounts for 25% of global luxury spending, but this year, China’s growth has slowed to a trickle.

India today is a much smaller luxury market, representing 5% of global luxury spend, but it’s suddenly seeing explosive growth.

GDP growth, 8.2% in 2023, lit the touch paper. Next: the fireworks.

India is the fastest-growing major global economy. Political reform and a fast-growing, hyper-aspirational, young middle-class are driving India toward being the third largest consumer market globally.

The luxury and ultra-luxury sectors, across real estate, hospitality, apparel, accessories and automotive, are witnessing phenomenal growth. In BDA’s latest insight piece, we analyse the tremendous growth of luxury in India.

Download the full report for more insights on the luxury sector in India


About BDA Partners

BDA Partners is the global investment banking advisor for Asia. We are a premium provider of Asia-related advice to sophisticated clients globally, with over 25 years’ experience advising on cross-border M&A, capital raising, and financial restructuring. We provide global reach with our teams in New York and London, and true regional depth through our seven Asian offices in Mumbai, Singapore, Ho Chi Minh City, Hong Kong, Shanghai, Seoul and Tokyo. BDA has deep expertise in the Chemicals, Consumer & Retail, Health, Industrials, Services, Sustainability and Technology sectors. We work relentlessly to earn our clients’ trust by delivering insightful advice and outstanding outcomes.

BDA Partners has strategic partnerships with William Blair, a premier global investment banking business, and with DBJ (Development Bank of Japan), a Japanese Government-owned bank with US$150bn of assets.

US securities transactions are performed by BDA Partners’ affiliate, BDA Advisors Inc, a broker-dealer registered with the Securities and Exchange Commission (SEC). BDA Advisors Inc is a member of the Financial Industry Regulatory Authority (FINRA) and SIPC. In the UK, BDA Partners is authorized and regulated by the Financial Conduct Authority (FCA). In Hong Kong, BDA Partners (HK) Ltd is licensed and regulated by the Securities & Futures Commission (SFC) to conduct Type 1 and Type 4 regulated activities to professional investors. www.bdapartners.com  

In China’s dynamic healthcare market, M&A activities are booming due to an ageing population and increasing consumer health demands. The sector is seeing heavy domestic investments from Chinese firms and Government funds. PE firms are seizing M&A opportunities amid capital raising challenges. Chinese companies are also eyeing cross-border M&A for tech-driven healthcare targets. The market outlook indicates industry reshuffles, rising demands for elderly care and consumer health, and flexible growth strategies by multinational firms.

Investment trends highlight a focus on resilient segments, surging investment in out-of-pocket payment sectors and Chinese firms expanding globally, particularly across SE Asia and the Middle East. European healthcare companies remain attractive for Chinese investors; licensing deals are on the rise, led by Chinese pharma firms. 

In our latest Insights piece, we summarise the predicted outlook of China healthcare M&A for 2024:

Download the full report for more Insights regarding the Chinese healthcare sector.


About BDA Partners

BDA Partners is the global investment banking advisor for Asia. We are a premium provider of Asia-related advice to sophisticated clients globally, with over 25 years’ experience advising on cross-border M&A, capital raising, and financial restructuring. We provide global reach with our teams in New York and London, and true regional depth through our seven Asian offices in Mumbai, Singapore, Ho Chi Minh City, Hong Kong, Shanghai, Seoul, and Tokyo. BDA has deep expertise in the Chemicals, Consumer & Retail, Health, Industrials, Services, Sustainability and Technology sectors. We work relentlessly to earn our clients’ trust by delivering insightful advice and outstanding outcomes.

BDA Partners has strategic partnerships with William Blair, a premier global investment banking business, and with DBJ (Development Bank of Japan), a Japanese Government-owned bank with US$150bn of assets. bdapartners.com

Jonathan Aiken, Partner and Head of London, discussed how a challenging economic environment is spurring the uptake of creative deal structures in a recent Ansarada Global Predictions Interview.

Which sectors, if any, do you believe will move to more aggressive growth strategies in their M&A programs, as opposed to more defensive dealmaking?

Within the mid-market, where we operate, investors strive for profitability and cashflow stability. In today’s complex investment environment, having high-revenue growth yet negative cashflow is completely out of vogue. Companies with a robust history of cashflow generation, for example the more resilient actors in the industrial and services sectors, have become good candidates for financing – or at least they don’t raise questions within investment committees or with their lenders. What one might think of as ‘traditional’ sector areas are outperforming as a result. Another example is healthcare, where macro trends such as aging populations and evolving healthcare needs in a post pandemic environment drive investment. The European luxury market has witnessed strong growth over the past few years. In France, some of the listed flagship leaders have seen phenomenal share price growth. While valuations have recently plateaued, the market boom reflects strong spending patterns of ultra-high-net-worth individuals from different regions across the globe – notably China and East Asia. Industries that have stronger cashflow and are more appealing to investors have been particularly resilient to the pressures within the global deal market. This is relevant to the mid-market, where M&A activity/volume has developed fairly well. It is at the higher end of the market where we have seen some multibillion-dollar transactions constrained due to a lack of availability of capital.

What do you think will be the biggest potential risks or challenges that dealmakers will have to contend with in 2024?

If you speak to dealmakers, the broad consensus would be the impact of unforeseen events. The global dealmaking community has lived through significant upheaval and sustained inflation. The challenges we are facing are significant and require nimble responses to seize new opportunities. Most practitioners believe that being able to react quickly to developing situations is a fundamental survival mechanism. On a micro level, it is worth sparing a thought for those managing their business through transactions, as often we hear of the difficulty in budgeting and forecasting while responding to supply chain disruption. Forecasting uncertainty and responding to market changes take up a disproportionate amount of business leaders’ time, and some do not have the necessary experience to build on. Some managers have not recently experienced significant inflation, for example, or needed to deploy price increases in their market – it is a novel experience for them. Even for leaders with 30 or 40 years of experience, the ability to respond and implement changes can be challenging. This dynamic ties into the broader dealmaking flow, as business leaders face the realization that their typical, traditional five-year business plan will not work in a challenging environment. Some businesses even have trouble forecasting growth over the next 12 months. This inherent uncertainty in the market creates a divergence between buyer and seller expectations – just one reason why dealmakers are experiencing difficulty closing transactions.

In your experience, how much more creative are dealmakers having to be, in terms of alternative deal structures, to bridge valuation gaps and get transactions over the line?

The market has come off a period of red-hot dealmaking in which the seller exercised an enormous amount of power, both in terms of the timing and terms of the transaction. During this period, we saw the dissipation, or disappearance in some cases, of dealmaking mechanisms such as earnouts. Now that dealmakers are operating in a much more uncertain environment, the balance of power has shifted, and some of these traditional mechanisms, including earnouts, are coming back to the fore to bridge the gap between buyer and seller expectations. We are also seeing a change in tack in relation to seller strategy. Whereas even in late 2022 financial sponsors would have run a competitive, fast-paced auction process, through 2023 owners of assets quietly and discreetly tested the market. This takes the form of entering into very specific conversations, seeking validation regarding buyer appetite, and even considering a bilateral process. This cautious, selective approach is very different to what we have seen in previous years. This period of relative quiet may present an interesting market environment for international buyers to consider deal opportunities. Many strategic buyers seeking cross-border opportunities have found it hard to compete against local sponsors within a competitive auction process when the market was booming. Now that valuations are more subdued, and the market is less pressured, it is an interesting time for international buyers. We will begin to see this trend play out, and it will be interesting to see how 2024 unfolds.

Amid a sea of economic and geopolitical challenges, are dealmakers dedicating more resources to due diligence to make sure potential deals get off on the right foot?

We are seeing a rise of vendor diligence across many different markets, even in markets that have not necessarily had a high level of experience in the process. In Asia, for example, a vendor will typically carry out financial, tax and other types of due diligence, whereas this was less common five years ago. ESG analysis is a newer area increasingly pursued. In the corporate carve-out space, a major cause of disagreement over value, and in many cases a potential roadblock in the deal, is within IT services, contracts and costing. In response to this challenge, we have seen a rise in thoughtful preparation of the IT diligence materials linked to IT resources for a dedicated asset and a focus on IT compliance. There is definitely more time and care spent on smoothing over potential issues. On the seller side, effective due diligence is part of de-risking a transaction and enhancing the probability of a deal crossing the line. We also see fairly rigorous and significant diligence analysis on the buyer side. Due to the shift in power between buyer and seller, the former can demand more concessions, and perhaps more price adjustments, by highlighting due diligence findings. It is in their interests to pursue the process vigorously.


About BDA Partners

BDA Partners is the global investment banking advisor for Asia. We are a premium provider of Asia-related advice to sophisticated clients globally, with over 25 years’ experience advising on cross-border M&A, capital raising, and financial restructuring. We provide global reach with our teams in New York and London, and true regional depth through our seven Asian offices in Mumbai, Singapore, Ho Chi Minh City, Hong Kong, Shanghai, Seoul, and Tokyo. BDA has deep expertise in the Chemicals, Consumer & Retail, Health, Industrials, Services, Sustainability and Technology sectors. We work relentlessly to earn our clients’ trust by delivering insightful advice and outstanding outcomes.

BDA Partners has strategic partnerships with William Blair, a premier global investment banking business, and with DBJ (Development Bank of Japan), a Japanese Government-owned bank with US$150bn of assets. bdapartners.com

One of the most promising shifts for decarbonisation is the introduction of “Cooling-as-a-Service” or “CaaS”. With temperatures rising globally, temperature cooling has never been as important but comes with a significant environmental footprint. Outsourcing cooling to a third party directly incentivises these service providers to provide service as efficiently and environmentally friendly as possible and design a better, less carbon-intensive cooling infrastructure.

Download the full report for more insight regarding CaaS and its potential impact on decarbonisation


Sources: United Nations, Global Change Data Lab, IEA, The Economist


About BDA Partners

BDA Partners is the global investment banking advisor for Asia. We are a premium provider of Asia-related advice to sophisticated clients globally, with over 25 years’ experience advising on cross-border M&A, capital raising, and financial restructuring. We provide global reach with our teams in New York and London, and true regional depth through our seven Asian offices in Mumbai, Singapore, Ho Chi Minh City, Hong Kong, Shanghai, Seoul, and Tokyo. BDA has deep expertise in the Chemicals, Consumer & Retail, Health, Industrials, Services, Sustainability and Technology sectors. We work relentlessly to earn our clients’ trust by delivering insightful advice and outstanding outcomes.

BDA Partners has strategic partnerships with William Blair, a premier global investment banking business, and with DBJ (Development Bank of Japan), a Japanese Government-owned bank with US$150bn of assets. bdapartners.com

Huong Trinh, Partner and Head of Ho Chi Minh City at BDA Partners, shares her insights with Vietnam Investment Review.

With only three months of the year left, how has Vietnam’s M&A for 2023 fared so far?

Over the second and third quarters of 2023, a number of M&A transactions with deal size of over $100 million were announced. Some notable deals are the investment of up to $500 million into Masan Group Corporation led by Bain Capital, the $381 million acquisition of FV Hospital by Thomson Medical Group, and the investment into Xuyen A Hospital by Warburg Pincus. In addition, there are ongoing sizable M&A transactions across the consumer, healthcare and education sectors, which have received strong interest from both strategic and financial investors and are likely to reach the signing stage in the next six months. Even though the total deal volume in 2023 might be impacted, the average transaction value based on recent transactions has increased significantly. The healthy deal flow emphasizes investors’ confidence in the market’s long-term growth potential.

As local businesses are struggling amid a challenging economic outlook, do you see foreign investors stepping up their M&A transactions here?

Despite various macroeconomic challenges, Vietnam is expected to achieve a GDP growth rate of 5-6 per cent in 2023. The macroeconomic environment and consumer demand are expected to start to recover in the first half of 2024. Foreign investors, despite the market’s weakening performance in 2023, continue to source and monitor the investment opportunities in Vietnam. There has been a long-term view that Vietnam is one of the most attractive markets for investment in Southeast Asia thanks to its favourable demographics, resilience, as well as government efforts in improving the investment environment.

Inbound M&As remain vibrant in banking, healthcare, renewables and real estate. Why do these sectors remain a target?

Vietnam’s favourable demographics, stable socioeconomic environment, increasing disposable income, and improving investment environment remain key factors that underpin the inbound investments into the banking sector, such as the $1.5 billion acquisition of a 15 per cent stake in VPBank by Sumitomo Mitsui Banking Corporation, and the $850 million acquisition of 15 per cent stake in BIDV by KEB Hana Bank. Notable deals in the healthcare sector are the acquisition of FV Hospital by Thomson Medical Group, the investment into Xuyen A Hospital by Warburg Pincus, AIH by Raffles Medical Group as well as Singapore’s sovereign wealth fund GIC’s investment into Nhi Dong 315, a Vietnamese pediatric clinic operator. In the renewable energy sector, Vietnam witnessed the $165 million acquisition of a 49 per cent stake in Vietnam solar platform Solar NT from Super Energy Corporation by AC Energy Corporation, and the $108 million acquisition of a 35 per cent stake in Gia Lai Electricity by JERA. Regarding real estate sector, there is the $250 million investment into Novaland led by Warburg Pincus, along with the $650 million investment into Vinhomes by KKR. We expect that M&A activities in these sectors will continue to increase in the future.

Do you expect any shift in investor interest in emerging fields in Vietnam, such as electronics, semiconductors, and electric vehicles?

Yes, we have seen increasing interest in these areas as a result of Vietnam’s unique positioning – strategic location, skilled workforce, cost advantages, and stable socioeconomic environment. Following the supply chain diversification which started during the pandemic, and increasing global demand for these products, Vietnam continues to invest in infrastructure and technology to become a major industrial hub in Asia. The government has taken a proactive approach in developing these new sectors. In August 2023, the Ministry of Transport submitted its proposal on special incentives for electric vehicle (EV) producers and users to a deputy prime minister. These incentives included preferential special consumption tax, exemption of licence plate issuance fees, preferential import tariffs on equipment, production lines and components for the production and assembly of EVs and batteries, and a $1,000 incentive for each EV purchases. As for semiconductors, while it is not a new area as foreign players, Samsung, Amkor Technology, and Hana Micron have already established presence in Vietnam. Such moves have been in the spotlight recently, being a key topic of discussion at the Vietnam – US Summit in September 2023. The Vietnam – US comprehensive strategic partnership and the government support will help Vietnam’s semiconductor industry to develop further.


About BDA Partners

BDA Partners is the global investment banking advisor for Asia. We are a premium provider of Asia-related advice to sophisticated clients globally, with over 25 years’ experience advising on cross-border M&A, capital raising, and financial restructuring. We provide global reach with our teams in New York and London, and true regional depth through our seven Asian offices in Mumbai, Singapore, Ho Chi Minh City, Hong Kong, Shanghai, Seoul, and Tokyo. BDA has deep expertise in the Chemicals, Consumer & Retail, Health, Industrials, Services, Sustainability and Technology sectors. We work relentlessly to earn our clients’ trust by delivering insightful advice and outstanding outcomes.

BDA Partners has strategic partnerships with William Blair, a premier global investment banking business, and with DBJ (Development Bank of Japan), a Japanese Government-owned bank with US$150bn of assets. bdapartners.com

BDA Partners Managing Partner Paul DiGiacomo was invited to be the keynote speaker at the VinaCapital Vietnam Investor Conference in Ho Chi Minh City in early October 2023. Having lived in Asia for 25 years and been active in Vietnam for the past 15 years, Paul has a unique perspective on the drivers and fundamentals of Vietnam’s investment landscape.

5 takeaways from the keynote speech

1. BDA is bullish on Vietnam

        • 15+ years active in the market 
        • Team of 10 M&A bankers
        • Investing opportunistically into early-stage opportunities through our partners’ fund 

2. Vietnam has attractive investment fundamentals, supported by:

3. External macroeconomic conditions that support Vietnam’s growth include:

4. Risks to Vietnam’s growth are:

5. The future is bright in Vietnam. By 2030 Vietnam will have:

BDA Partners has been active in Vietnam for over 15 years. We received our first investment banking mandate in 2007 and established an office in Ho Chi Minh in 2011. We now have a team of 10 bankers on the ground working across multiple sectors.

BDA Partners has significant experience across the water M&A spectrum and is actively engaged on multiple on-going mandates in the sector. We take this opportunity to provide you with a deep dive into the water landscape, including:

Please reach out to our dedicated Sustainability team to discuss further.

Download the full report


Sources: (1) NASA; (2) The Guardian; (3) United Nations; (4) Borgen Magazine; (5) The Guardian; (6) EWG; (7) Financial Times; (8) US Water Alliance; (9) The Guardian; (10) Carbon Brief; (11) US Water Alliance; (12) Desalination Latin America; (13) Water.org; (14) Umweltbundesamt; (15) European Commission; (16) Global Citizen; (17) The National News; (18) Asian Development Bank ; (19) United Nations; (20) China Dialogue; (21) Japan International Cooperation Agency; Financial valuation metrics and M&A activity from CapitalIQ, Mergermarket and BDA transactions


About BDA Partners

BDA Partners is the global investment banking advisor for Asia. We are a premium provider of Asia-related advice to sophisticated clients globally, with over 25 years’ experience advising on cross-border M&A, capital raising, and financial restructuring. We provide global reach with our teams in New York and London, and true regional depth through our seven Asian offices in Mumbai, Singapore, Ho Chi Minh City, Hong Kong, Shanghai, Seoul, and Tokyo. BDA has deep expertise in the Chemicals, Consumer & Retail, Health, Industrials, Services and Technology sectors. We work relentlessly to earn our clients’ trust by delivering insightful advice and outstanding outcomes.

BDA Partners has strategic partnerships with William Blair, a premier global investment banking business, and with DBJ (Development Bank of Japan), a Japanese Government-owned bank with US$150bn of assets. bdapartners.com

In recent years, many companies have re-evaluated the potential of their businesses and are now considering divesting their non-core assets. This enables the firms to focus on assets providing long-term value, whilst at the same time, presenting M&A opportunities for well-funded companies.

Key considerations and drivers

The post COVID world has seen greater strains on supply chain security, inflation in wages, labour scarcity and heightened commodity volatility. Geopolitical tensions, increasing trade friction, and renewed interest in industrial strategy are all accelerating non-core divestment considerations.

Today, boardrooms are consumed with the topic of supply chain de-risking, in particular with reference to China. De-risking- as opposed to economic decoupling- is a nuanced view that sees global trade and investment as deep-rooted. Solutions include diversification and avoidance of excessive concentration by country and industry. Connected to this trend of de-risking is nearshoring. A Buck Consultants survey, published in February 2022, found more than 60% of European companies are looking to on-shore or re-shore Asian production in the next three years, with the main winners being Central and Eastern Europe, including Turkey.

These megatrends of de-risking and nearshoring are combining to spur further divestments. Below we explore additional factors that are prompting non-core disposals:

Governance of international assets has become increasingly fraught

  1. Regulatory changes and local compliance: trends continue to favour local management and a deep local presence. The ability of foreign owners to respond to international changes is becoming ever more costly and challenging
  2. Prioritization of domestic factors: Foreign brands and companies are at a strategic disadvantage (e.g. consumer preferences, trade policies)
  3. Opportunity cost relative to home market: In a fragmenting world with increasing cross-border barriers, home market advantage can lead to increased profitability and/or simpler forms of control and management structure
  4. Risk appetite: Increasingly, asset owners must decide on multi-year, global strategies. A decline in risk appetite is leading to a flight to safety
  5. Variation by sector: Industrial strategy has focused on politically sensitive sectors that affect employment or security; however some sectors such as healthcare and outsourced technology services have been less impacted.

M&A considerations:

BDA’s view

With changing market conditions, corporates are re-evaluating their operations with a view to exiting certain business lines to focus on long-term core business areas. We anticipate an important increase in ownership rationalisation driven by risk mitigation, regional compliance and a focus on domestic comparative advantage.

BDA is well placed to support our clients as they confront these opportunities and challenges by virtue of our global presence and significant experience in corporate carveout and cross-border divestments.

Recent selected BDA examples of cross-border divestments between Asia and the West:


About BDA Partners

BDA Partners is the global investment banking advisor for Asia. We are a premium provider of Asia-related advice to sophisticated clients globally, with over 25 years’ experience advising on cross-border M&A, capital raising, and financial restructuring. We provide global reach with our teams in New York and London, and true regional depth through our seven Asian offices in Mumbai, Singapore, Ho Chi Minh City, Hong Kong, Shanghai, Seoul, and Tokyo. BDA has deep expertise in the Chemicals, Consumer & Retail, Health, Industrials, Services and Technology sectors. We work relentlessly to earn our clients’ trust by delivering insightful advice and outstanding outcomes.

BDA Partners has strategic partnerships with William Blair, a premier global investment banking business, and with DBJ (Development Bank of Japan), a Japanese Government-owned bank with US$150bn of assets. bdapartners.com

Anthony Siu, Partner and Co-Head of China at BDA Partners, was interviewed by Wancheng Hu, a reporter at South Reviews. The publication is a political and economics magazine published under the Guangzhou Daily Press Group in Southern China. The following is a translated version of the article published on June 5, 2023.

China’s outbound M&A volume dropped to its lowest point last year. According to PricewaterhouseCoopers, the total value of M&A transactions in China fell to US$485bn in 2022, representing an 80% decline from the peak in 2016, and is comparable to 2009 when investment activities plummeted in the wake of the global financial crisis.

The Covid-19 pandemic and increasing geopolitical tensions led to varying degrees of restrictions on capital flow. Combined with stringent national security reviews, China’s outbound M&A has suffered a dramatic slowdown in recent years.

As the pandemic came to an end in early 2023, investment activities gradually picked up again. China’s outbound investment policies have not changed significantly, and the central government’s focus remains on encouraging foreign direct investments in healthcare, technology, advanced manufacturing, energy, and resources.

In the first half of 2023, the M&A market is back on a recovery path, with domestic transactions dominating China’s M&A. Cross-border M&A will likely see a pick-up in the second half of 2023, with Asia Pacific and the Middle East becoming the preferred markets for Chinese acquirers.

Amid early signs of an increase in activities, China’s outbound M&A will face challenges as well as opportunities in the near term. The following are key factors to consider for China’s outbound M&A:

1. Impact of increasing regulations on cross-border M&A 

BDA Partners specialises in cross-border M&A advisory and has been the top-ranked investment bank for cross-border M&A (enterprise value up to US$1bn) in Asia since 2016.

Mr. Siu moved to Shanghai from Hong Kong in 2008 and has been engaging in Chinese M&A advisory ever since. Having witnessed a long period of unprecedented growth of Chinese M&A, he was apprehensive about the recent downturn.

Siu said “For M&A practitioners, a lot has changed in recent years. The number of Chinese companies looking to engage in outbound M&A has shrunk significantly. The combined impact of the pandemic and the geopolitical tensions have led to a dramatic decline in M&A volume.”

While he believes that the pandemic impact is temporary, the geopolitical impact on cross-border M&A will be longer-lasting. In particular, the heavy regulatory scrutiny on China’s outbound M&A transactions is likely to stay for some time.

Among the affected regions, the US has been impacted the most. In January 2020, the US Treasury published new regulations based on the Foreign Investment Risk Review Modernization Act that significantly expanded the scope of the Committee on Foreign Investment in the United States (CFIUS).

“When a non-US company wants to acquire a US company, it needs to go through CFIUS review. The review will take a long time if the target’s industry is considered sensitive and involves national security concerns” said Siu, “although many transactions were not vetoed, they did not receive CFIUS approval and therefore were unable to close.”

In addition, countries that were previously considered to be open to foreign investments are moving toward increasingly stringent FDI reviews.

Germany, for instance, the country with the largest number of Chinese investments in the EU, had promulgated the Foreign Trade and Payments Act, imposing strict review measures for investments by non-EU countries and expanding the scope of mandatory filing obligations involving “critical infrastructure” and “critical technology.” Industry practitioners say that a large number of transactions were abandoned due to a slim chance of passing FDI or anti-monopoly review.

“Obtaining regulatory approval is a common concern for companies involved in cross-border M&A. If a Chinese state-owned enterprise (SOE) decides to conduct a transaction overseas, it requires approval from the State-owned Assets Supervision and Administration Commission (SASAC). Moreover, when the transaction amount exceeds US$300m, further approval is required from the China National Development and Reform Commission (NDRC). These approvals will typically take time to go through,” said Siu.

The aforementioned includes only the approval procedures required from the Chinese side, while each country has its own jurisdiction and approval procedures, which further complicates the closing of a transaction. A few high-profile cases involving SOE acquirers over the years include:

In addition to national security considerations, Chinese acquirers face increased scrutiny in areas such as information transparency, financing sources, and shareholding structure.

2. Where will the China capital go?

Despite some challenges, outbound M&A activities are showing signs of recovery.

Countries around the world are welcoming investments in industries that are deemed important to the country’s economic development. In addition, industries that have been hit hard by the pandemic, including transportation and logistics, tourism and hospitality, basic materials, and consumer goods, are recovering, giving acquirers renewed confidence in investing in the future upside of these industries.

Siu is bullish on the China outbound M&A market. The resumption of international air travel and the normalization of business activities will allow Chinese acquirers to become more active in engaging in outbound M&A activities. However, he believes that this wave of outbound M&A will be different from the past. Rather than focusing on the U.S. and Europe, Chinese acquirers will be shifting their focus to new markets such as Southeast Asia, the Middle East, and Africa.

“China today is playing a role similar to the US in the 1990s and early 2000s,” said Siu.

During those periods, US companies, facing a saturating domestic market, expanded their international footprint to high-growth emerging markets via M&A.

China is doing something similar now. In the past, the focus was on acquiring Western technologies and know-how to bring them to the Chinese market. This coming wave will be about investing in opportunities that allow Chinese acquirers to export self-developed technologies and products to the international markets. Instead of facing head-on competition in a crowded domestic market, they go abroad to look for new growth opportunities. Companies in the technology, media and telecom (TMT) space and the electric vehicle (EV) sector are among those industries with growth potential.

Southeast Asia, due to its close geographical proximity to China, has been a favourite destination for China’s outbound investments. Indonesia is one such example.

Indonesia has the world’s fourth-largest population with 274 million people and a young labour force. In 2022, investments made by Chinese companies in Indonesia reached US$8.2bn the second largest source of FDI in Indonesia. Today, Chinese investments are present in e-commerce, ride-hailing services, online food delivery, digital financial services, and online gaming sectors in Indonesia.

“Unlike trading and manufacturing companies that have gone to the West in the early days, Chinese high-tech and smart manufacturing companies looking to expand overseas now select Southeast Asia, the Middle East, and Africa as their priority markets to enter,” said Siu.

However, with benefits also come challenges. Just like many foreign companies find it difficult to adapt to the Chinese market, many Chinese companies that entered new markets have encountered challenges in working with local management, understanding the local culture, and dealing with workers that are not accustomed to long working hours.

The above are all common problems encountered by Chinese acquirers in outbound investments. Essentially, it is the lack of attention and effort paid to post-acquisition integration and understanding of cultural differences that hinder the acquirer’s success. For example, Chinese companies often lack experience in managing employees under a union-led workforce. If appointed Chinese executives attempt to impose a top-down culture, employees are likely to express dissatisfaction. Over time, a growing estrangement will develop between the local employees and the Chinese executives.

3. Focus on building up M&A expertise and acquiring talent

Having worked on M&A for over two decades, Siu has witnessed many successful acquisitions, while others failed and had to go through a difficult period of restructuring.

He observed that the issue faced by Chinese acquirers is usually caused by a breakdown in communication. When a Chinese acquirer becomes the controlling shareholder, the target’s management is often concerned about how the new owner will affect its corporate culture and management style, soft issues that are often overlooked by the Chinese acquirers. If these problems are not handled properly, the target’s management team will ultimately choose to leave.

These kinds of issues can often be mitigated if the acquirer has already established a presence in the target’s region, along with a team that understands the local system and culture. If the acquirer can understand the target company’s pain points, it can address these issues upfront more effectively, and the chance of a successful integration will increase.

Siu pointed out as an example a cross-border transaction that BDA and its strategic partner, William Blair, served as the sell-side advisors for Summa Equity, a Finnish private equity firm, on the sale of its portfolio company, HyTest, to China’s Mindray for €532m in 2021.

HyTest is a leading global supplier of in vitro diagnostic (IVD) raw materials, with in-house R&D and production capabilities for high-quality antigens and antibodies. This acquisition has helped Mindray broaden its international footprint and strengthen its value chain coverage while fulfilling the need for top-graded IVD upstream raw materials in China.

Simeng Zhang, Director at BDA Partners and the project lead for the sale of HyTest, stated “compared to other companies, Mindray has a professional in-house M&A team composed of talent with prior experience at accounting firms, law firms, and investment banks. Having this talent on the team made the due diligence, negotiation management, and decision-making process much smoother.”

She also mentioned that Mindray and HyTest had already established a good level of trust in prior business relationships. “In the past few years, more than half of HyTest’s revenue came from the China market, and with Mindray’s globalization strategy, the acquisition of HyTest became particularly attractive to Mindray.”

Though BDA Partners often takes on the role of a sell-side advisor, when the transaction involves a Chinese buyer, BDA Partners will also take the initiative to coordinate with the buyer to elaborate thoughts from the seller’s side, including management’s concerns on the transaction and key transaction terms.

Siu believes that the days of relying on the China growth story to win over the seller’s and target’s management are gone. Chinese acquirers should have a clear plan for globalising the target’s business beyond just China. “We are actively working with our clients to search for quality investment targets on a global scale to help them expand their international footprint,” said Siu.

The history of globalisation proved that successful M&A transactions can generate higher shareholder returns and help global players strengthen their competencies and maintain their market-leading position.

Being able to survive the pandemic will make a company stronger, while others facing challenges will become more open to being acquired. “For ambitious Chinese companies, now is a good time for M&A,” said Siu.

However, overseas competitors will not just sit back and wait. To grasp the opportunity and secure a meaningful position among global leaders, Chinese acquirers should further enhance their in-house M&A capabilities and attract talent with international experience and M&A expertise.


About BDA Partners

BDA Partners is the global investment banking advisor for Asia. We are a premium provider of Asia-related advice to sophisticated clients globally, with over 25 years’ experience advising on cross-border M&A, capital raising, and financial restructuring. We provide global reach with our teams in New York and London, and true regional depth through our seven Asian offices in Mumbai, Singapore, Ho Chi Minh City, Hong Kong, Shanghai, Seoul, and Tokyo. BDA has deep expertise in the Chemicals, Consumer & Retail, Health, Industrials, Services and Technology sectors. We work relentlessly to earn our clients’ trust by delivering insightful advice and outstanding outcomes.

BDA Partners has strategic partnerships with William Blair, a premier global investment banking business, and with DBJ (Development Bank of Japan), a Japanese Government-owned bank with US$150bn of assets. bdapartners.com

The private equity (PE) landscape in Vietnam is becoming increasingly attractive to global investors due to improvements in regulations, governance and corporate profiles. In the early 2000s and before, there was very limited PE activity in Vietnam, a market characterized by a shortage of private enterprises and unclear regulatory framework on private investments. It was not until the 2005 Enterprise Law came into effect that Vietnam first established a common legal framework for the establishment and management of both State Owned Enterprises (SOEs) and private enterprises, boosting investors’ confidence for investments in private companies.

Along with the rapid growth of Vietnam’s economy, PE activity has soared since the second half of the 2000s. This can be attributed to a number of factors:

From the quiet days when there was only a handful of small value deals in the early 2000s, PE investors have been gradually playing a much bigger role in Vietnam’s M&A market. Larger deals involving PE investors have become more common – there were more than 30 deals valued at US$100m or higher over the last five years[1], while the top ten largest PE transactions of all time in Vietnam all occurred during this period. For Vietnamese businesses, PE funding brings in not only much needed capital for growth or additional liquidity for shareholders, but also important corporate governance guidelines and operational know-how of international standards for optimal value generation. Institutional presence among the cap table would also highlight the legitimacy and sustainability of the business models of local enterprises, which in turn enhance their attractiveness to more global investors.

DateInvestorTargetSectorValue (US$m)Stake
Jun-20KKR’s consortiumVinhomesReal Estate6516%
Oct-18SK InvestmentsMasan GroupConsumer4749%
Aug-18Hanwha Asset ManagementVingroupDiversified403Undisc.
May-21Alibaba, BPEAThe CrownXConsumer4006%
Dec-18Warburg PincusTechcombankFinancial Services3704%
Dec-21TPG, Temasek, ADIAThe CrownXConsumer3505%
Jul-19GIC, SoftbankVNPayTechnology300Undisc.
Jan-19GIC, MizuhoVietcombankFinancial Services2643%
Jun-22Warburg PincusNovalandReal Estate250Undisc.
Jul-21General Atlantic, DragoneerVNPayTechnology250Undisc.
Figure 1: Top ten all-time largest PE transactions in Vietnam

Emerging trends

1. Rising competition in dealmaking from global funds: In the earlier days, most PE transactions in Vietnam involved local funds given their advantages in familiarity with the investment landscape, with examples such as Indochina Capital-Hoang Quan (2006)[2], Mekong Capital-MobileWorld (2007)[3], and VinaCapital-PNJ (2008)[4]. Over time, more and more global PE firms have established local presence in Vietnam, with dedicated investment teams and network of advisors on the ground to start building their track record in the country. While local funds remain active in the market, global funds, with stronger financial capabilities, have been dominating the investment landscape – as evidenced in the list of top ten all-time largest PE transactions in Vietnam

2. Minority vs. control/buyout transactions: Minority transactions are still more popular for PE investors in Vietnam given the lack of onshore deal financing options commonly found in buyout transactions and risk aversion as most funds still have relatively short track record in the country. However, the market has witnessed several buyout transactions in the past, especially in the Healthcare and Education sectors such as CVC-Phuong Chau(2021)[5], BPEA-Vietnam USA Society English Centers (2019)[6], TPG-Vietnam Australia International School (2017)[7], and Navis-Hanoi French Hospital (2016)[8]. From our recent interactions with regional PEs, we understand that there is a growing appetite for control/buyout deals in Vietnam, driven by both record levels of dry powder and the maturation of the investment landscape.

3. Growing importance of ESG topics : ESG topics are no longer considered as a matter of compliance but have become opportunities to unlock value and present key selling points to potential investors. More investors have been appointing specialized ESG advisors for due diligence, while aligning with the target companies on having strong ESG values ingrained in corporate culture as part of deal negotiation and post-deal integration.

Looking ahead – Sectors to watch for PE activity in Vietnam

Consumer

Healthcare

Education:

Financial Services

Logistics:

Technology

The PE market in Vietnam has changed drastically since the early 2000’s as we have experienced more favourable conditions. Going forward, we expect not only the number of deals to increase, but the size of deals in Vietnam to grow as PE investors seek opportunities.   


[1] Source: Mergermarket

[2] https://vnexpress.net/indochina-capital-mua-cp-hoang-quan-2696691.html

[3] https://www.mekongcapital.com/our-investment/mobile-world/

[4] https://www.investegate.co.uk/vietnam-opp-fund-ltd/rns/investment/200805021205506730T/

[5] https://www.dealstreetasia.com/stories/cvc-capital-phuong-chau-hospital-307941

[6] https://www.globalprivatecapital.org/newsroom/bpea-acquires-majority-stake-in-vus/

[7] https://www.vas.edu.vn/en/news/he-thong-truong-dan-lap-quoc-te-viet-uc-co-nha-dua-tu-chien-luoc-moi

[8] https://www.naviscapital.com/wp-content/uploads/2016/06/Navis-Press-Release-30-June-2016-Acquisition-of-Hanoi-French-Hospital.pdf

[9] https://en.vietnamplus.vn/over-70-of-vietnamese-population-use-internet/231833.vnp


About BDA Partners

BDA Partners is the global investment banking advisor for Asia. We are a premium provider of Asia-related advice to sophisticated clients globally, with over 25 years’ experience advising on cross-border M&A, capital raising, and financial restructuring. We provide global reach with our teams in New York and London, and true regional depth through our seven Asian offices in Mumbai, Singapore, Ho Chi Minh City, Hong Kong, Shanghai, Seoul, and Tokyo. BDA has deep expertise in the Chemicals, Consumer & Retail, Health, Industrials, Services and Technology sectors. We work relentlessly to earn our clients’ trust by delivering insightful advice and outstanding outcomes.

BDA Partners has strategic partnerships with William Blair, a premier global investment banking business, and with DBJ (Development Bank of Japan), a Japanese Government-owned bank with US$150bn of assets. bdapartners.com