Japanese investors bank on Vietnam as growth slows in their country

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Vietnamese banks have been attracting more and more Japanese investment, mainly through mergers and acquisitions.

In the middle of this month Ho Chi Minh City-based HDBank said it was in talks to sell a 30 percent stake to three undisclosed Japanese finance firms.

The country caps foreign ownership of a domestic bank at 30 percent and at 20 percent for a single investor.

Late last year Mitsubishi UFJ Financial Group Inc., which holds a 15 percent stake in both Eximbank and Vietcombank, bought 20 percent of Vietinbank at US$734 million.

According to Hanoi-based financial data service firm StoxPlus, the purchase was the largest M&A deal in the country since the start of 2012 to this year's first quarter end.

Japanese insurer Sumitomo Life last December bought the 18 percent stake held by HSBC Vietnam in Vietnam's leading insurance firm BaoViet Holdings for $340 million.

Sacombank chairman Pham Huu Phu, who said his bank plans to sell a 15 percent stake to a Japanese partner, said Japanese investors eyeing local banks are often large firms who offer excellent terms.

Recof Corp., a Japanese M&A adviser, told news website Saigon Times that Japanese investors have great interest in Vietnamese banks.

Japan has steadily increased investment in Vietnam through M&As since 2009, it added.

Tran Hoai Vu, Recof's manager for Vietnam, said Japanese investors are competing with each other to tie up with the best Vietnamese partners.

A StoxPlus report said Japan's sluggish economic growth prompts firms to expand abroad to sustain business growth.

Japan, Asia's second-largest economy, reported GDP growth of only 1.4 percent last year and the pace is forecast to slow down even further in the long term.

Many Japanese investors are shifting to Southeast Asia because of concerns over their country's political tensions with China, their major market.

They struck 75 M&As deals in the region in the first 10 months, a record number, according to Recof. 

Vietnam is more attractive to Japanese investors than some other countries like Indonesia and Thailand in terms of cultural similarities and the political situation, StoxPlus said.

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