Binh Le Vandekerckove, CEO & Head of Mergers & Acquisitions at ASART Deal Advisory, discusses how Vietnam’s healthcare market landscape is changing with many notable M&A transactions announced recently.

2023 has been a rollercoaster for most corners of the global economy, with inflation and a cost of living crisis hitting many countries, while concerns about recessions in key markets like China continue to simmer.

Given its high level of exposure to the global economy, Vietnam is no exception, with sectors like international tourism continuing to recover from the worst of the pandemic while some export industries struggle due to reduced demand. The mergers and acquisition (M&A) market, meanwhile, is a perfect encapsulation of how complex 2023 has been in economic terms.

According to Binh Le Vandekerckove, CEO and Head of Mergers & Acquisitions at the deal advisory firm ASART, “Vietnam maintains its status as an attractive investment destination as well as for M&A activities, underscored by the country’s rapid economic advancement and consistent high GDP growth rates,” Binh said. “It is also worth noting that M&A deals used to be dominated by foreign players, but domestic companies now have become more active in M&A activities.”

Although M&A deal volume through the first 10 months of this year fell 5% year-onyear, deal value rose significantly 43% yearon-year, indicating deals in 2023 are more sophisticated and have higher value.

She added that ESG (Environmental, Social, and Governance) factors are also playing an increasingly important role in M&A transactions, especially for large agreements. About 20-30% of deals done at her firm in the last 5 years require ESG due diligence, compared to the 5-10% number before.

Two key transactions were the record-breaking USD1.5 billion acquisition of a 15% stake in VPBank by Sumitomo Mitsui Banking Corporation (SMBC) and Thomson Medical Group’s USD381.4 million acquisition of Far East Medical Vietnam, the operator of FV Hospital in District 7. This has quickly become the largest disclosed deal in the history of Vietnam’s healthcare sector in the last few years.

How Mergers & Acquisitions are Enlivening the Healthcare Sector in Vietnam

According to research from ASART, in 2021, Vietnam’s healthcare market was valued at an estimated US$22.1 billion, or US$225 per person, and was expected to grow to US$36.6 billion by 2026. The global healthcare market was estimated to reach USD9,663 billion in 2021, or USD1,227 per person, this means there is plenty of room for both organic and inorganic expansion for this sector in Vietnam.

The healthcare landscape in Vietnam is divided between well-equipped, comfortable private clinics and hospitals, and the overburdened public health system. The establishment of private clinics and hospitals is encouraged by the government through tax incentives and the reduction in foreign ownership limitations.

In addition to the aforementioned deal with Thompson Medical Group, several other notable deals were announced recently that energize this sector:

  • The Luxembourg-based private equity firm CVC Capital Partners took a 60% stake at an undisclosed value in Phuong Chau, the largest private healthcare provider in the Mekong Delta, in 2022.
  • KKR acquired Medical Saigon Group in August 2023.
  • Warburg Pincus reacted quickly by participating in the acquisition of Xuyen A in September 2023. 
  • In October 2023, Raffles Medical Group, also based in Singapore, acquired a majority of shares in the American International Hospital in Thu Duc City.

Before CVC Capital Partners took a 60% stake in Phuong Chau in 2022, there had only been a few M&A transactions in this sector over the last 10 years, for an average of about one notable deal per year or every two years. The Phuong Chau transaction created a strong appetite in this sector, bringing in many leading strategic buyers and private equity names, which drove the announcement of approximately 10 notable deals in 2023 alone. When Binh’s firm ASART, the exclusive lead sell-side advisor for the Phuong Chau transaction, announced the deal in 2022, Binh wrote that it was an ”important transaction that could significantly change the healthcare market in Vietnam for the better.” She is confident that it was strategically structured not only for the benefit of the hospital group and its shareholders but also for the benefit of the market and its stakeholders.

With the highest number of deals in Vietnam’s healthcare sector announced over the last two years, Binh believes that “these major transactions will surely change the current market landscape and will provide many more options to patients and their families and loved ones. We should expect to see a higher level of quality and more serious specialty treatment available in the private healthcare market.”
While these developments paint a promising picture that emphasizes the substantial opportunities present in the country’s market and the sector’s continuous evolution, it is also essential to acknowledge the persistent difficulties that accompany such growth. A nuanced approach that combines seizing opportunities with addressing challenges will be imperative for long-term prosperity in this dynamic sector.  

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