Vietnam’s flagship air carrier – Vietnam Airlines – will sell 3.475% stake, equivalent to 49,009,008 shares of the company in its initial public offering (IPO) this month, the country’s transport ministry said in a directive.
The initial share price will be 22,300 Dong ($1.06) each, and the sale is set to take place on November 14 on the Hochiminh Stock Exchange (STC).
The company has not given a date for the listing. Unlike a regular IPOs, companies in Vietnam take several months to a year, to list their shares after the float.
Vietnam Airlines is also looking for strategic partners to sell about 20% stake in the company, said a Singapore-based banker, who is tracking the process, adding that between three to five players are likely to be interested in the carrier, which is a part of the Sky Team alliance.
In a recent report, the carrier’s consultant – BIDV Securities – said that the Vietnam Airlines prefers to have a foreign airline as a strategic partner, but then added that it was also open to offering this stake to financial investors from abroad.
Vietnamese local media, quoting officials from the airline, reported that the carrier has received interest from two strategic investors ahead of the IPO. The stake sale to the strategic investor is likely to be conclude by March 2015.
The airline, which boasts of a young 82-aircraft fleet and flies 52 international routes to 29 destinations in 17 countries, as well as 39 local routes to 21 cities within the country, plans to leverage its network to position Vietnam as a gateway to a host of other areas in the region (including China, Southeast Asia, Northeast Asia, North Pacific and Europe.)
It has ordered a fleet of A350-900s and B787-9s, which are slated to join service from the next year and will help it fly longer distances at reduced costs.
Vietnam Airlines has over 50% market share in the country, and has so far held its ground against competition from low-cost carrier VietJet. It is also a equity shareholder in budget carrier Jetstar Pacific.