M&A fever spreading to Vietnam

Foreign insurers now turning to mergers and acquisitions to enter this fast-growing Southeast Asian market

M&A fever spreading to Vietnam

Insurance News

By Gabriel Olano

Mergers and acquisitions (M&A) in both the life and non-life insurance industry are picking up globally, and an expert says that Vietnam is also in on the trend.

According to 2017 insurance market forecast reports, M&A is one of the most important goals for insurance companies in Vietnam to grow.

“On the European insurance markets, there have been rumours of big insurance brands to be bought out soon,” a source told the Vietnam Investment Review. “There has yet to be a definitive move to confirm these rumours, since the information only aims to examine the market’s reactions. However, Asia seems a likely target for M&A.”

Several years ago, foreign insurance firms entered Vietnam by forming a subsidiary or establishing a joint venture with a domestic company. But now, Vietnam’s rapidly growing insurance market is currently opening new investment paths for foreign financial and insurance companies.

One method increasing in popularity is forming a joint venture with a domestic partner and later buying out its shares, turning the joint venture into a 100% foreign-owned entity. Sun Life and Aviva are some of the recent examples in the insurance arena, with reports of a Thai insurer planning to follow suit.

“Buying brands with small market shares and slow development then investing to rebuild and renew the business and eventually selling when the time comes is a common trick of the trade for many financial groups,” an industry expert added. “This trend is not only popular in Vietnam but also in other markets.”

Related stories:
Aviva buys out Vietnam joint venture
Vietnam’s insurance sector invests US$6.7 billion in the economy
Sun Life holds event to mark Vietnam relaunch

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