<article>Foreign institutions have kept away from the much anticipated IPO of the Vietnam’s flagship air carrier – <a href="http://www.dealstreetasia.com/stories/vietnam-airlines-to-sell-3-47-stake-in-ipo-seeks-strategic-partners/" target="_blank">Vietnam Airlines</a> (Vietnam Aviation Corporation).</article>

Foreign institutions have kept away from the much anticipated IPO of the Vietnam’s flagship air carrier – <a href="http://www.dealstreetasia.com/stories/vietnam-airlines-to-sell-3-47-stake-in-ipo-seeks-strategic-partners/" target="_blank">Vietnam Airlines</a> (Vietnam Aviation Corporation).
Going by the IPO related investor data released by the Ho Chi Minh Stock Exchange (HOSE), two domestic firms have registered to purchase 98% share of airliners shares. According to market speculation these are most likely to be <a href="http://www.vietcombank.com.vn" target="_blank">Vietcombank</a> (VCB) and <a href="https://www.techcombank.com.vn" target="_blank">Techcombank</a>, which also happen to be the largest creditors of the Vietnam Airlines.
Vietnam Airlines sold 3.475% stake, equivalent to 49,009,008 shares of the company in its initial public offering (IPO)  today. The initial share price was 22,300 Dong ($1.06) each. Read more about the Vietnam Airlines IPO here.
According to an announcement made by HOSE, 1608 investors registered for 49,336,200 shares for the IPO auction of Vietnam Airlines; none of them were foreign institutions. The domestic organisations registered for more than 48.3 million shares.Out of these, two institution registered to buy almost 98% of the shares of Vietnam Airlines.
According to market participants, the two organisations are most likely to be the Vietcombank and the Techcombank, says Vietnam Securities Company (VCSC).
VCSC added that it was possible that the foreign and individual investors have not paid much attention to the IPO due to the high share price, which was about 2.2 times higher than book value (company’s EV/ EBITA in 2013 was at 11.7, while the EV/ EBITA ratio in the region ranges from 1.1 to 9.0.)
Going by the Vietnam Airlines debt structure for the year end 2013, the two organisations are currently the largest creditors of the company. Vietnam Airlines has borrowed more than VND three trillion from Vietcombank and VND 1,100 billion from the Techcombank.
Cathay United is also a large creditor with more than VND 2,300 billion in term loan for Vietnam Airlines.
However, HOSE has already announced in the preliminary results that no foreign organisations have registered for the IPO, therefore Cathay United is not one of the investors.
Potential investors have been keeping away from IPOs as there is no specific time frame for listing of Vietnam Airlines shares, once the IPO is complete.
Reportedly, Vietnam Airlines previously served as a shareholder of Techcombank, but exited the company by the end of 2013, in accordance with restructuring scheme.

Vietnam Airlines IPO: Domestic banks to be largest investors?

Bring stories like this into your inbox every day.

Sign up for our newsletter - The Daily Brief

Vietnam Airlines IPO: Domestic banks to be largest investors?

Start your deal-making journey now!

Bring stories like this into your inbox every day.

Sign up for our newsletter - The Daily Brief