President Kwon Pyung-oh of Korea Trade Promotion Corp. (KOTRA).

M&As have emerged as an alternative option for Korean companies wanting to enter “New South” markets. The Ministry of Trade, Industry and Energy (MOTIE) and Korea Trade Promotion Corp. (KOTRA) jointly held a session to explain “2018 New South M&A Market” at the InterContinental Hotel in Samseong-dong, Seoul, on Nov. 15.

Seven influential consulting companies from five countries–India, Vietnam, Indonesia and Singapore, presented M&A trends of each country. About 60 companies and financial investors held consultations on M&A projects with foreign consulting companies.

Some 30 M&A cases were presented during the meeting. FinTech and financing companies accounted for 38 percent of the total, followed by chemical companies (17.2 percent) and consumer firms (13.8 percent). They also include firms in the packing materials, automotive parts and logistics sectors.
 A speaker with the State Capital Investment Corp. (SCIS), Vietnam’s state-run agency on privatization explained privatization plans of Vietnam’s public entities. Vietnam plans to make 400 state-run enterprises private by 2020.

Representatives from the M&A business department of Mahindra & Mahindra, India’s representative automobile group, and Global M&A Partners India were invited to present India’s M&A market trends and promising projects. M&A targets in the automotive parts, chemical and packing material sectors were also introduced.

A report from the Merger-market showed that the Indian M&A market surged to $84.8 billion so far this year, up 80 percent over the same period of last year to rank 3rd in Asia with an 11.6 percent share.

Companies from the United States, France and Japan were engaged in active M&A activities to have a head start in the Indian market. On the other hand, Korea’s entry to the Indian market was not so big. Korean firms were involved in three M&A cases worth $260 million in 2017. The event served as an impetus for Korean companies to expand investments in India.

M&As are an effective management tool to enter a market in a short period of time, so Korean companies’ demand for M&As for the exploration of foreign markets are on the rise.

A survey conducted during the period between 2011 and 2017 by KOTRA showed that 63 percent of respondents cited the main purpose of their M&As as market entry, followed by 13 percent for spurring exports, 11 percent for securing production centers and 6 percent for securing technologies.

Major stumbling blocks that hinder Korean companies’ M&A attempts are picked as information gathering and exploration of foreign companies to buy.

In order to eliminate such stumbling blocks, KOTRA launched support for overseas M&As such as foreign M&A information collection, exploration something to buy, and consulting for purchasing in February 2013.

 In particular, KOTRA, focusing on helping Korean SMEs find SME M&A targets, holds sessions to explain M&A market trends and information on M&A targets of each region on a regular basis.

The latest event is expected to help Korean companies make breakthroughs to enter “New South” markets by exploring M&A targets and providing information on markets in Southeast Asian and Indian regions.

Invest Korea President Chang Sang-hyun said M&As are designed to not only help Korean SMEs enter foreign markets and secure production centers but also contribute to their joining of global value chain.

KOTRA plans to provide full support for Korean companies’ entering foreign markets by implementing M&A support projects through foreign network in Korea and abroad.

KOTRA’s headquarters in Yangjae-dong, Seoul. (Photos: KOTRA)