The Vietnam Exhibition and Fair Centre (VEFAC), better known as the Giang Vo Exhibition Centre, will offer 16.3 million shares for auction, during its initial public offering (IPO) on March 20.
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There are two things that make VEFAC’s IPO notable. First, its charter capital will increase 10-fold after selling shares, an unprecendented jump in the stock market’s history. Second, the proceeds from the IPO will be used to invest in a slew of mega realty projects.
The state capital in VEFAC will remain at 10 per cent, while the company will issue additional shares to increase the charter capital from VND166.6 billion ($7.8 million) to VND1.666 trillion ($78 million). Thus, the shares offered to the public will account for a 90 per cent proportion of the capital of the Hanoi-based exhibition centre, after the IPO.
The company revealed that its strategic shareholder, which is a local leading real estate company, would hold 80 per cent stake.
According to the market insiders, the “local leading real estate company” could be Vingroup, whose stock price has been since successively increasing.
VEFAC has planned that within the first three years after the equitisation, the current VND166.6 billion capital will be spent on organising fairs, while some VND1.5 trillion raised from the share auction will be invested in major real estate projects. As cash is used for strategic development purpose, the company might not have to pay high dividends for several years.
However, the prospects of investment in VEFAC are enormous, as the government has assigned it the vital National Exhibition and Fair Centre, which is divided into three component projects that real estate specialists see as the “golden land”.
The first project to be mentioned is the “Nhat Tan – Noi Bai Exhibition City” project, located on the route connecting the emerging political geographic area of Nhat Tan and the northern international airport.
Meanwhile, for the second project, the current location of the company on Giang Vo Street, Hanoi, will be cleared to construct an entertainment complex.
The third project is to transform the capital city’s southwest Me Tri district into a cultural, tourism and trade centre.