Vietnam Exhibition and Fair Centre JSC (VEFAC), or the Giang Vo Exhibition Centre, has a line up of ambitious projects, including the mega project of the National Exhibition and Fair Centre, that is most likely to be implemented in the next three years.
As one of the state-owned companies that has been equitised this year, it now has Vingroup – a leading private property developer – as a strategic partner.
Initially, Vingroup had acquired 80 per cent in VEFAC, but took up further stake when the initial public offer (IPO) on March 20 failed to attract investors. VEFAC had offered some 16.3 million shares, of which, investors bought only 620,500 units at the average price of VND10,058 ($0.47).
As Vingroup had committed to purchase the remaining shares (after the IPO auction failed to get buyers), its ownership in VFAC increased to 89.42 per cent. The state holding in VFAC remains at 10 per cent.
Vingroup’s investment is the new national exhibition centre project, comprises three component projects. The first one is planned to be located on the route connecting the emerging political-geographic area of Nhat Tan, and the Noi Bai International Airport. Its function will be organising fairs, replacing the current company’s location in Hanoi centre, which will be transformed into an entertainment complex under the second project. Meanwhile, the third unit project is to build a cultural, tourism and trade centre in the capital city’s southwest Me Tri district.
Tran Van Tan, CEO of the exhibition organiser company, told DEALSTREETASIA more about the involvement of Vingroup and this mega project.
Can you reveal more about the IPO price of VEFAC?
Vingroup, our strategic shareholder, had purchased the shares prior to the IPO at VND10,050, which is the starting price for the IPO auction and also the highest rate given by our advisory agency. Considering Vingroup as a wholesale buyer, the fact that it accepted to buy at that price has proven it is not lower than VEFAC’s real value.
Do you mean the two sides had known the shares could reach that price?
No, we could not know or do anything to that. The transaction depends on market factors. They are the unanticipated elements that we must obey.
Does VEFAC plan to issue additional shares?
That will depend on the direction of the equitisation steering committee. Meanwhile, we will list shares as soon as possible.
How do you expect the performance of the company to be, with the partnership with Vingroup?
I believe our operation will improve, then the returns and salary for employees will be higher. Regarding the model of a joint stock company, there will be a equal payment model, in which workers are paid as per their true ability.
Vingroup has to make commitments to us, one of which is to sufficiently finance VEFAC’s investment projects, including the three projects (the aforementioned, located between Nhat Tan and Noi Bai), rather than just paying for the 80 per cent interest. With respect to the new project, we have not calculated the total investment, because the exact location, costs and scale have not been determined yet.
So what is the progress of relocating the exhibition centre?
The prime minister has only decided that it is the Nhat Tan – Noi Bai area.The precise location will be chosen when the Ministry of Culture, Sports and Tousism, the Ministry of Construction and the Hanoi city agree on a plan to submit to the government.
After finishing the 1:500 scale, Vingroup will have to pay for the land use, and that will be a huge amount of money. The joint stock company (VEFAC after IPO) will be charged at market price, and the Hanoi People’s Committee will be the unit to calculate the value.
If Vingroup cannot complete the project within three years, its strategic partner status will be withdrawn without compensation.
Can you explain more in detail? Who will be in charge of handling the situation if the investor fails to meet the schedule?
We have to say that we do not have that power. The state will take charge. The state will still be a shareholder of the company (10 per cent) and has the right to veto. This is clearly stated in the law on enterprise and the agreement with Vingroup. So, how much the state owns does not matter. It will not affect the government’s right in problems related to land and addressing project faults.
The equitisation of VEFAC was approved with the statement that the state does not hold a dominating stake, that can even be reduced as low as possible. However, the role of the state shareholder is undeniable.