In 2013, seven of Vietnam's state-owned companies are expected to make initial public offering (IPO), and the total listed value of stock on the floor is expected to reach VND25 trillion.
Vietnam’s stock market is warming up in 2013. The new draft on equitisation which is about to be issued will create favourable conditions for IPOs to speed up. However, will releasing large quantities of shares lead to market indigestion?
At the beginning of March, there were two corporations performing IPO but the results were not so good. Particularly, one corporation couldn’t sell its shares and the other was able to sell only more than half.
Vietnam Livestock Corporation auctioned 26,696,000 shares and 13,531,300 shares were sold (accounting for 50.68 percent of the shares). The successful bid price is VND10,100 a share, the total value of sold shares reached VND136,67 billion.
Sugar Corporation II auctioned 16,765,900 shares but was able to sell only 775,600 shares (accounting for 4.6 percent of the total offering). The average successful bid price is VND10,101 a share, and the total value collected after that was VND 7.83 billion.
Notably, most of the auction participants were individuals, while large investors were quite indifferent. Sugar Corporation I will also go public in 2013.
The most interesting fact is the IPO of Vietnam Airlines. The Ministry of Transport has forced Vietnam Airlines to complete its equitisation in the second half of 2013. According to the restructuring plan of 2012 – 2015 period approved by the Prime Minister, Vietnam Airlines will pursue IPO with the State accounting for 65 to 75 percent of the charter capital (VND8,942 billion).
Under the plan, apart from the mother corporation, which includes nine member companies, the restructured Vietnam Airlines will consist of 26 independently audited companies.
In April, 2013, Vietnam Airlines’ IPO will be about 383 million shares. The company expects to raise US$200 million, with the average price of about 10,920 VND a share.
Vietnam Textile and Garment Group (Vinatex) also will pursue IPO on 1st July, 2013. Currently, this group is negotiating to select foreign strategic partners. A number of investors from Japan intend to contribute capital to the corporation.
Viglacera Corporation is expected to go public in September, 2013 and sell to the public about 20 percent of the capital.
In 2013, the Corporation Vietnam Automobile Industry (Vinamotor) continues to implement its restructuring plan. In particular, the corporation will complete equitisation of the parent company in 2013. (Vinamotor) continues to implement its restructuring plan. In particular, the corporation will complete equitisation of the parent company in 2013.
In 2012, the stock market's deep fall made stock prices of a series of business lose value. When put on auction, the price remained very low, yet the stock is still dull. However, in 2013, many experts predict that the stock market will warm up, and the IPO auction market will be much more favourable in 2012.
A new point in creating momentum for businesses to take part in auction and IPO is the new law on equitisation of state-owned enterprises expected to be issued in 2013. This new decree will address two major problems, including land treatment in the evaluating process and mechanisms to attract business strategic shareholders.
According to the draft decree, enterprises can negotiate with strategic investors and sell a portion of their funds under the agreed price. Investors can participate in and support business’ operation, restructure business to perform better, and then pursue IPO.
Accordingly, the new regulations will increase the activeness and rights for strategic investors, encouraging them to pour more capital into businesses under current regulations. This reduces time and procedures, as well as increases activeness for enterprises.
The draft will be made public by the Ministry of Finance for comments from relevant businesses and is expected to be issued in the second quarter of 2013. Notably, in the equitisation plan of corporations in 2013, a large percentage of shares is sold outside and land lease is chosen by the majority of equitized businesses.
In 2013, there will be at least seven state corporations which will complete equitisation and join the stock market, not to mention about 20 state-owned enterprises of ministries, branches and localities which will take the floor, along with the two beer industry giants (Sabeco and Habeco) possibly expected to join the stock market after 2 years of empty promises.
Some investors fear that the stock market would not absorb that very large supply of stock. However, if the government decides to extend the room for foreign investment to exceed current limits for the beer industry, textiles and airlines, foreign investors could hold the majority of shares about to appear on stock market in 2013, and there will be no market indigestion.
PV
Vietnamese
