FPT plans takeovers as Vietnam software maker looks abroad

FPT plans takeovers as Vietnam software maker looks abroad

FPT Corp., Vietnam's largest publicly traded telecommunications and software company, aims to complete two takeovers this year as it seeks to boost international sales, Chairman Truong Gia Binh said.

FPT expects the deals to be completed in the second half “if everything goes smoothly,” Binh said yesterday in an interview in Hanoi, where the company is based. One target is in Singapore and the second will be in Europe, said Binh, declining to be more specific. “I would just say the value is not small,” he said.

FPT, whose clients include Microsoft Corp. and Panasonic Corp., is among Vietnamese companies that want to grow abroad as opportunities to boost domestic sales become more limited. Vietnam Dairy Products Joint-Stock Co., or Vinamilk, the nation’s largest dairy producer, plans a global expansion to more than double revenue to $3 billion by 2017.

“We have to boost M&A activity for our global strategy,” Binh said.

The company has almost 4 trillion dong ($189.6 million) of surplus cash and plans to spend about $50 million a year for acquisitions in the next three years, Binh said.

FPT Chief Executive Officer Bui Quang Ngoc said in February that the company will spend as much as $20 million on the Singapore acquisition.

FPT probably exceeded first-quarter earnings estimates, Binh also said, declining to be more specific. The company will release results in the coming week, he said.

International sales

The company’s shares have climbed 48 percent this year, outperforming the 14 percent gain in the benchmark VN Index. (VNINDEX) The company has almost doubled net income over the past five years, according to data compiled by Bloomberg. The stock fell 0.7 percent as of 9:53 a.m. local time while the index dropped 0.6 percent.

FPT, which had sales of 28.6 trillion dong ($1.4 billion) in 2013, wants to more than triple revenue from overseas to $400 million by the end of 2016, Ngoc said when he became CEO in July 2013.

Ngoc and Binh are the co-founders of 25-year-old FPT, which develops software and provides technology services for its clients. Binh was born in 1956.

The company wants to increase operations in Japan, the U.S. and Europe to tap demand outside Vietnam, where growth is constrained, Ngoc said in February. FPT also plans to expand in developing countries such as Myanmar, Cambodia and the Philippines, he said.

FPT, which has more than 17,000 employees, aims to increase revenue by 11 percent and pretax profit by 6 percent this year, Ngoc said in February. The company wants to boost sales by an average 15 percent annually through 2016, Ngoc said in February.

Management outlook

The company appointed Ngoc as CEO in last July, almost 11 months after Truong Dinh Anh resigned over disagreements with the board.

“We are quite happy with the CEO, and the position will not change in the next three to four years,” Binh said. After that, the position “will be open” for either Vietnamese or foreigners to occupy, he said.

FPT faces competition from outsourcing companies from India such as Wipro Ltd. (WPRO) and Tata Consultancy Services Ltd. (TCS), as well as Hewlett-Packard Co. (HPQ) and International Business Machines Corp. (IBM), Lam Nguyen, a Ho Chi Minh City-based analyst at International Data Corp. said in February.

Bloomberg

More : Vietnam, FPT Corp, takeover, sales, M&A, telecommunications, software

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