A record year for M&A activity in the Asia Pacific region; Vietnam, the fastest growing M&A country in the region

Ho Chi Minh City, 17 April 2008 – According to PricewaterhouseCoopers’ recent Asia-Pacific M&A Bulletin, "Steaming into choppy waters" , the value of M&A in Asia-Pacific in 2007 hit an all-time high of US$883 billion (excluding intra-regional deals), 69% higher than 2006’s US$524 billion which was the previous record year. Australia, Singapore, China and India led the charge with year on year growth in excess of 80%. Deal value in Vietnam grew fastest from US$ 299 million in 2006 to US$ 1,753 million in 2007.

Chao Choon Ong, Asia Pacific Transactions Leader of PricewaterhouseCoopers highlighted that a number of factors conjured up the "perfect storm" for the record year for M&A activity in 2007 - strong global and regional economic growth, stock markets reaching unprecedented levels, flood of liquidity in the market, and corporate investment war-chests beefed up by the stock markets and strong corporate performance. However, he cautioned that 2007 had ended with dark clouds on the horizon. A congruence of subprime write-downs, inflation and a possible US-led global recession and other fears have caused the stock markets to go through some of their most volatile months. Lenders are showing signs of caution, although credit is still available for the right deals.

Despite the dark clouds, Chao Choon Ong is upbeat: “personally, I remain optimistic, as do my colleagues who contributed to the bulletin. We see many positive factors in play that augurs well for Asia M&A.”

PricewaterhouseCoopers was ranked No.1 Financial Advisor by volume in Asia Pacific (excluding Japan) for the 3rd year by Thomson Financial.

In Vietnam, M&A activity levels soared

According to the Bulletin, deal volume in Vietnam has continued to increase significantly over the past year. The total value of the 113 deals reported during the year set a record of US$ 1,753 million compared to just 38 deals reported with a total value of US$ 299 million in 2006. Deals of over US$ 1,350 million, or 76% of the total deal value, were recorded in the financial services industry.

“The Vietnamese government’s continued commitment to the equitisation of state-owned enterprises, the easing of ownership restrictions applicable to foreign investors, and certain changes in the tax regulations all contribute to improvements in the deal environment and the availability of target companies.” said Stephen Gaskill, a director in PricewaterhouserCoopers Vietnam. “Affordable high quality labour in manufacturing remains a key driver of foreign investment. In addition, the growing purchasing power of the 86 million Vietnamese will surely attract further interest in the country. Major new industries are opening up and more foreigners are expected to enter Vietnam both via the M&A and the FDI routes.”

Conditions for sourcing and executing deals in Vietnam are likely to continue to improve at a slow but steady pace. The government has committed to speeding up administrative reform thus obtaining licences is expected to be a faster and more transparent process. Strategic buyers interested in major stakes in present and former state-owned enterprises will continue to face not only tough price negotiations but also expectations for significant technical assistance in bringing the operations of their targets in line with international standards.