M&A makes up majority of foreign capital inflows

HCMC - Some US$6 billion out of US$7.63 billion in foreign investment capital pledged to HCMC last year came from capital contributions, share acquisitions and purchases of stakes from domestic businesses.

HCMC vice chairman Le Thanh Liem said at a conference in Binh Duong Province on February 14 that the pledged investment capital from foreign investors for HCMC last year picked up by 15.59% against the previous year. Of these, there were 1,060 new projects, with total registered capital of US$811.68 million, and 244 projects with additional capital of over US$835 million.

Last year also saw 3,283 cases in which foreign investors received approval to contribute capital, buy shares and contribute capital to domestic firms, with registered capital totalling US$5.99 billion.

With these results, HCMC received around 60% of foreign capital.

According to Liem, the 2014 investment law has provided a favorable legal corridor for foreign investors to proceed with mergers and acquisitions (M&As).

There have been continuous increases in the number and value of these investments, with only US$1.5 billion received in 2016, US$3.68 billion in 2017 and almost US$6 billion last year.

Liem noted that registered capital through M&As in HCMC had so far reached US$10 billion, 22% of the total foreign capital the city has attracted since 1988.

Also, in HCMC private investments are overwhelming foreign investments. Liem pointed out that the amounts of private capital and foreign direct investment (FDI) capital were almost the same, 29% and 29.5% in 2000, but 68.1% and 15.6% in 2015.

Regarding absolute values, private investments in the city have risen 33-fold, from VND7.4 trillion to VND250 trillion, whereas FDI capital has soared by 7.45 times, from VND7.6 trillion to VND56 trillion.

As shared by Liem, in the past, FDI businesses tended to dominate major property projects, which required heavy investment and advanced construction technology, but local businesses are now able to compete and even buy some projects owned by FDI firms.

On a national scale, Liem said that many economic groups have grown rapidly, dominated the markets and competed with FDI firms in areas where Vietnam is often weaker such as telecoms, automobile manufacturing and electronics manufacturing.

This, according to Liem, has confirmed the position and role of domestic firms in the new age.

However, Liem raised the issue of whether FDI attraction policies are no longer able to maintain their effectiveness as they once did.

He also highlighted the need to build a separate policy to attract special partners. “We have attracted many large investors to Vietnam, but what we have not been able to do is get multinational companies to base their headquarters or research and development wings in Vietnam.”

This is partly due to the fact that Vietnam’s investment environment is not ripe enough to be appealing and the country has yet to impose drastic measures to attract special partners, Liem added.

Last month, the Ministry of Planning and Investment coordinated with the Government Office; relevant ministries and agencies; and the governments of Haiphong, Bac Ninh and Hanoi to organize meetings on foreign investment attraction. These meetings, chaired by Deputy Prime Minister Vuong Dinh Hue, were intended to gather the opinions and proposals of local governments on foreign investment policies.

The meeting in Binh Duong on February 14 was attended by more than 650 representatives of the Central Economic Commission, ministries and agencies, governments of southern localities and authorities of economic zones, industrial parks, associations and investment organizations.

-TheSaigontime-

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How Confidentiality Agreements Important In Mergers & Acquisitions Transactions

These days, Mergers and acquisitions are highly popular in the business world. Previously, M&A transactions were mainly an instrument for a company expansion and one of the most desired kinds of investments

in developed countries, but M&A transactions are being held continuously all across the world. The purpose of a merger or acquisition transaction can be both a strategic expansion of business (market share, technology, geography, etc,), and a financial purchase for resale or public offering of shares. In some cases, & A transactions can be aimed at eliminating a competitor and blocking its development.

In Mergers and acquisitions, Confidentiality Agreements plays an important role. It helps business organizations to maintain the privacy of their assets, trade secrets, future business expansion plan, etc. Have a look at some main advantages of the Confidentiality agreement in M&A transactions.

1. Involved Parties

Only the purchaser and the vendor parties that agree to the confidentiality agreement. If a company with only a few or no assets is getting the confidential information, the vendor may need a guarantor to the agreement. The guarantor has to ensure the parties that he/she will strictly follow his obligations under the confidentiality agreement. To take care of all these, you should hire Mergers and Acquisition Lawyers. They can supervise the activities of all the participants and make sure they are following the agreement without any fail.

2. Revealing The Secret Information

Generally, the confidentiality agreement notifies the ‘purpose’ of the agreement which includes the assessment by the purchaser and allowed individuals to review M&A transactions as per the deal. M&A Law Firms can play an important role here. They can supervise whether the authorized person is working properly or not. So, you must avail their legal consultation services and ensure the confidentiality of M&A transactions.

3. Things To Be Disclosed

All those parties that are involved in the confidentiality agreement are not allowed to reveal the sensitive information related to the companies. It has some exception too, such as

The allowed persons that are appointed to observe the confidentiality agreement. Professional advisors, employees, and party directors can be appointed as permitted persons. Those parties are required to know the confidential information to complete the M&A transactions. In some situations, where there are potential providers of finance, co-investors, and syndicates, parties may assume them as “allowed persons” and can communicate with them.

While exchanging highly sensitive information, the disclosing persons may need parties to make separate confidentiality agreements and exchange them with each other to maintain the privacy of their information at all costs.

4. Announcement For Public

Generally, parties involved in M&A transactions are supposed not to make the public announcement about their deals because it can create an environment of negativity for customers, suppliers, and employees. So, you should do the same. If there is any need to make the public announcement for the enlightenment of the stakeholders, you can do that in consultation with other involved parties.

5. Breach Of Agreement

If any party breaches the agreement, other involved individuals can solve the matter through dialogue or take the legal route to protect the deal. M&A Law Firms can help you a lot in this regard. Just explain each and everything very well and get the things done.

6. Exemption

The confidentiality agreement in M&A transaction is not applied on the following:

Information which is already available in the public domain,

Information which is already occupied by some legally before the deal,

Information which is disclosed to 3 parties that are not supposed to keep the privacy of the deal and

Information which the other party made public with the prior approval of the disclosing party.

7. Termination Of The Deal

All involved parties generally agree to maintain the privacy of their information for 1-2 years once the deal is reached. In some cases, if you need, you can come out of the deal if it is no longer beneficial for you and your business. For this, you need to inform other parties as agreed in the deal.

Final Words:

In M&A transactions, there is a huge importance of keeping the important information private and confidential to make progress sooner or later. The above-mentioned points show the importance of Confidentiality Agreements in M&A transactions.

Source: Quora

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