Vietnam’s five state-owned enterprises are expected to raise $77.5 million through initial public offerings (IPOs), on the Ho Chi Minh Stock Exchange (HSX) in November. More government enterprise IPO’s are expected next month.
The sale of shares is part of government’s accelerated privatisation drive that might see listing of more than 400 state entities by the end of 2015.
The biggest and the most well-known IPO in this November float, is that of the country’s air carrier Vietnam Airlines, which is expected to issue 49 million shares at 22,300 VND each, totaling 1.02 trillion VND ( $51.3 million).
Four other enterprises will also be offloading stake to raise $26.2 million ( 558 billion VND) by collectively selling 55.8 million shares at 10,000 VND per share. These include the Industrial Gases and Welding Electrode Limited Company (SOVIGAZ), Dong Nai Water Supply Company Limited (DOWACO) and the two subsidiaries of Saigon Trading Group (SATRA)– the Saigon SouthWest Trading JSC (SSWT) and the Satico JSC.
The shares for all the companies will be listed at the nominal value of VND 10,000 per share.
According to an earlier report in Bloomberg, while the global investor community has been bullish on Vietnam, it has not shown much interest in the stake sale by the government-run enterprises. This has been mainly due to a perceived lack of corporate governance and transparency in the running of these companies. Another discouraging factor has been the delayed trading of the stocks; the actual listing of the shares of a company in Vietnam can be delayed by months (and sometimes years) after the IPO, making it an illiquid investment for that time period.
The performance of the Vietnam Airlines IPO, which has generated global investor interest (unlike other state-enterprise share sales), could become a determining factor in the success of Vietnam government’s privatisation drive. Vietnam Airlines will offload 3.47% of the company’s stake in a share sale on November 14.
Similarly, SOVIGAZ – a member of Vietnam National Chemical Group, is planning to go public on November 10. With 10,566,000 shares on offer (36% of the company’s equity), SOVIGAZ expects to raise over 100 billion VND ($4.7 million) from the IPO.
The company is a state-owned manufacturer of medical gas, industrial gas products, wielding electric rods and chemicals in Vietnam. It has a charter capital of 293.500.000.000 VND ($13.8 million) and clocked a revenue of 140.8 billion VND in the first six months of 2014, a 2% decrease, compared the same period last year.
DOWACO with the charter capital of 1 trillion VND ($47 million) is owned by Sonadezi Corporation and will be selling about 36 million shares (36% equity stake) at the exchange, during this month. First six months of revenue for the company, this year, stood at 235.6 billion VND, while the profit-after-tax was at 10 billion VND, an increase of 0.9% and 0.2%, respectively compared to the same period last year.
SSWT and Satico JSC are both selling the shares on November 28. SSWT, a retailer, that trades in a variety of products (food, beverage, automobiles, motorbikes, real estate, advertising rights, etc) has a charter capital of 110 billion VND ($5.17 million) and is offloading 70% stake by offering 7,700,000 shares. In the first six months of 2014, SSWT’s revenue was 211 billion VND, an increase of 39% compared to the same period last year. However, the company did not make profits.
Satico JSC, which has VND 42 billion in charter capital, is offering 1,551,000 shares or about 75% of its equity stake in the November float. Its revenue was 40 billion VND for the last year, a 29% increase since 2012.
(edited by Yamini Dhall)
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