ANZ at risk of losing out from SSI divestment
ANZ at risk of losing out from SSI divestment
The investment of ANZ in Sai Gon Securities Inc. (SSI), if calculated in dollars, might prove to be unprofitable even after the bank divests from the Vietnamese brokerage.
In September 2007, ANZ spent US$88 million to buy 10 per cent of the company. Three months later, the SSI price reached about VND180,000 ($8.4) per share, which more than doubled the bank's average investment cost. However, the price of the stock plunged and hit a record low of just VND27,000 in 2008.
In order to cover the loss, ANZ bought more than 10 million SSI shares, thereby increasing its ownership to 17.5 per cent, and waited for the stock to rise again.
On Monday, ANZ announced it would divest completely from the securities company and sell its shares to domestic investors, including Nguyen Duy Hung, SSI chairman and chief executive officer.
ANZ's total investment in SSI is valued at $120 million. In the past seven years that it held the shares, ANZ received nearly $20 million in dividends. Therefore, for the bank to cover its loss, the upcoming sale must be at least $100 million, and the share price must be VND34,500, which is higher than SSI's closing value of VND31,000 yesterday.
According to SSI, ANZ decided to withdraw its capital because it wanted to concentrate on commercial banking operations in the Vietnamese market. Hung said the divestment would not affect his company's business strategy and would give SSI a huge opportunity.
He said a good number of foreign investors were interested in SSI as the company topped the market with increasing profits. It will also be a favourable opportunity for Hung to increase his holdings. He has an 8.2-per cent stake in SSI.
"Since the shares will not be sold in the public market, it will not directly affect SSI share value," he added. Hung and his brothers have registered to buy 29.3 million shares, or an 8.3-per cent stake. The transactions will be conducted in November.
Apart from ANZ, other foreign shareholders of SSI include Japan's Daiwa Securities and Ukraine's Dragon Capital, with 10 per cent for each.
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