Exploring the Attraction: Why Foreign Investors are Eager to Acquire Vietnamese Consumer Financial Businesses

384

Leading Asian financial conglomerates are extending their influence in Vietnam through the acquisition of entire or partial stakes in consumer finance companies, Sophie Dao, Senior Partner at GBS – one of the best M&A advisory firm in Vietnam told reported.

Bloomberg recently cited a close source, reporting that Thailand’s largest banks, Kasikornbank and SCB X PCL, are among the potential bidders for Home Credit’s consumer lending business in Vietnam. Additionally, KB Kookmin Bank, a subsidiary of South Korea’s KB Financial Group, has entered the next round of negotiations.

Sources reveal that Home Credit aims to identify buyers for its business in Vietnam before the end of this year. Deliberations are ongoing, and potential buyers may decide not to proceed, while Home Credit might also retain its assets for a longer period. The deal’s estimated value could be around $700 million.

“KBank is currently running KBank Biz Loan, a credit service for small-scale retail stores. A potential agreement with Home Credit would enable the bank to promote financial services for small business customers,” shared one of the sources close to KBank with Bloomberg.

In a recent press conference, KBank’s Chairman Pipit Aneaknithi stated that Vietnam is a focal point for the bank’s development in the Southeast Asian region. According to the head of KBank, the bank sees an opportunity as over 97% of businesses in Vietnam are SMEs, but they only hold a 20% market share in the credit capital market structure.

AEON Financial Service Co., Ltd., a subsidiary of Japan’s largest retail group, AEON Group, has recently acquired the entire Financial Company Limited (PTF) from SeABank for a transfer price of VND 4.3 trillion.

In Vietnam, AEON Group is a significant player in the retail sector. The group has invested over $1.18 billion in Vietnam, marking the largest capital investment by AEON worldwide. AEON currently operates six shopping centers in major cities such as Hanoi, Hai Phong, and Ho Chi Minh City, with plans to open a new shopping center in Hue next year.

During a meeting with the Chairman of the National Assembly, Vương Đình Huệ (who was the Deputy Prime Minister at the time) in 2019, Masaki Suzuki, Chairman of AEON Financial Service, expressed that AEON considers Vietnam a key investment area for the group in Southeast Asia. The company plans to expand to 30 large-scale shopping centers with a total investment of around $5 billion, aiming to create 50,000 jobs for local workers.

In addition to retail, Masaki Suzuki stated that AEON is involved in financial operations, contributing to the overall strength of AEON in Japan. Therefore, AEON aims to expand its financial activities in Vietnam by acquiring foreign financial companies or state-owned financial companies.

In 2021, Thailand’s Krungsri Public Company Limited (Krungsri) reached an agreement to acquire 100% of SHB Finance’s capital from SHB. Specifically, SHB will transfer 50% of SHB Finance’s charter capital to Krungsri and will continue to transfer the remaining 50% after 3 years.

Last May, SHB completed the initial transfer of 50% of SHB Finance’s charter capital to Krungsri. At the same time, the Thai bank also introduced personnel to take on key leadership positions at SHB Finance.

Through its investment in SHB Finance, Krungsri openly expressed its ambition to lead the consumer finance sector in Vietnam. “Vietnam’s economy is expected to continue high growth, with an annual growth potential of around 6-7%, along with expanding business opportunities due to increased consumption. We believe that the cooperation between Krungsri and SHB Finance will strengthen the brand, operational efficiency, and position of SHB Finance as a leading company in the Vietnamese consumer finance market,” said Kenichi Yamato, Chairman and CEO of Krungsri.

Previously, in early 2018, Lotte Card of South Korea spent nearly VND 1,700 billion to acquire Techcom Finance from Techcombank. This was one of the major M&A deals in the Vietnamese market in 2018.

In addition to complete acquisitions, many foreign financial institutions have invested tens of millions or even billions of dollars to acquire nearly 50% of stakes in financial companies.

In 2021, SMBC Consumer Finance Company (SMBCCF), a subsidiary of Japan’s Sumitomo Mitsui Financial Group, successfully acquired 49% of FE Credit’s charter capital from VPBank, with a transaction value of nearly $1.4 billion.

SMBC stated that its investment in FE Credit is part of its medium-term strategy to expand its business platform in Asia. SMBC expects this investment to create synergies in both directions: sharing its business secrets and learning from its partner’s business strategies.

Earlier, MB and HDBank had also sold 49% of their financial subsidiaries to Shinsei Bank and Saison Group of Japan.

On the market, MSB is currently working with several foreign financial institutions to sell part or all of its capital in FCCOM Financial Company.

Related

Source: Vietnam Insider