New regulations allow cheaper strategic investor entry
New regulations allow cheaper strategic investor entry
New regulations allowing state-owned enterprises (SOEs) to sell shares to strategic investors before or at the same time as their IPOs are expected to streamline their equitisation.
Decree 59/2011 effective on September 5, 2011 and Decree 189/2013 effective on January 15, 2014 as well as documents issued by the Ministry of Finance (MoF) allow SOEs to sell shares to strategic investors before or at the same time as their IPOs.
The price of shares is either negotiated or determined by an auction among strategic investors, but has to be equal to or higher than the initial price approved by authorities.
The new regulations replaced Decree 109/2007/ND-CP on the equitisation of SEOs, which stipulated that strategic investors cannot pay below the average successful bidding price of the IPO for an SOE stake.
SOEs hope the change will make it easier for them to find strategic investors that can help them increase their competitiveness.
In its IPO scheduled for September 22, 2014, Vietnam National Textile and Garment Group is going to sell 120 million shares, or a 24 per cent stake, to strategic investors, deputy director Le Tien Truong said, adding that the firm will have at most three strategic investors, including one in finance and two in production and distribution.
Meanwhile, flag carrier Vietnam Airlines hopes to sell a 20 per cent stake to strategic investors in its IPO scheduled for the end of 2014.
The Vietnamese government has set a goal of equitising 432 SOEs in 2014 and 2015 as part of its economic reform for sustainable growth. Progress was poor in the first half of this year, reported the MoF.
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