Vietnam hastens IPOs of state-owned firms

Flag of Vietnam (Visual by zdiviv, Freedigitalphotos.net)

Vietnam’s financial authorities and capital market participants met on Wednesday to tackle the problems in equitising state-owned enterprises and hasten the initial public offer (IPO) of some 350 more companies before 2016.

The Vietnamese Ministry of Finance, the State Securities Commission (SSC) and the Hanoi Stock Exchange jointly introduced a series of regulatory documents that go into the details – from corporate evaluation to the process of filing an IPO plan to the stock exchange, so that the companies are well prepared for their restructuring strategies.

The IPO value of state-owned companies in 2014 was estimated at VND11.4 trillion ($530.23 million), higher by eight times than in 2013 – a three-fold of the combined value in the previous three successive years.

In 2014, the percentage of successful IPO, which saw the offered shares sold out, increased 30 per cent at the beginning of the year to 66 per cent by year-end.

Entering 2015, the total figure of IPO in the first quarter reached some VND1.25 trillion ($58.14 million), with the success rate of 44 per cent.

The equitisation plans for 20 out of 22 state corporations/groups were approved last year. The majority of these giants will be privatised this year – a huge mission for the country’s Ministry of Finance and the SSC.

Hoang Van Thu, vice head of the ministry’s corporate finance department, alleged that these parent corporations have large scale of operations and complex structure, so their equitisation will be the most challenging.

In total, i.e including subsidiaries of those corporation and other state-run firms, the remaining nine months of this year will see 90 per cent of some 400 companies equitised (including additional companies under the revised plan).

Also read: Vietnam to launch 292 state co IPOs in 2015

The tasks in 2015 is largely to deal with completing the legal system for restructuring of the State-owned companies and transforming them into joint stock companies; and determining what percentage of offered shares will be alluring to investors, particularly foreign players.

The aforementioned figures hint that the number of successful IPO has gone down during the first three months of 2015.

The reason for this is the slowness in information disclosure, stated Bui Hoang Hai from the SSC. The law regulates that a state-own enterprise must publish its information about the IPO within a good 20 days prior to the auction. “Most companies have done exactly in the least number of days, so investors often does not have enough time to prepare the money and to learn about the company,” Hai clarified.

In addition, the firms should also add more information themselves into the submission besides the basic requirements. “The lack of information will lead to lower interests from investors,” he said.

Meanwhile, the operation efficiency of listed companies has improved significantly over the years, said the SSC chairman Vu Bang.

Their total assets have increased by an annual rate of 13 per cent, while profit has witnessed growth of 10 per cent per year, he added and commented: “The companies were right in implementing IPO and listing their stocks.”

Bang also pledged that the commission, along with other securities watchdogs, will enhance the position of the local stock market to attract more foreign investment.

In terms of outside investment, Vu Anh Minh, director of the Ministry of Transport’s corporate management division, shared his experience that the Central Transportation Hospital, one of the ministry’s entities, invited strategic partners to join in the early stage of the equitisation process, instead of selling the stakes post IPO.

Minh also revealed that most strategic investors of businesses under the ministry’s governance have proposed to acquire the entire state capital. “Only by mobilising capital from private investors can state-run firms, including biggest ones like the Vietnam Airlines or the Airports Corporation of Vietnam, improve their operation,” he affirmed.

Also read: 

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More companies eye state stake in Vinamotor

Image:freedigitalphotos.net

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.