Ciencos expect to thrive with new execs
Ciencos expect to thrive with new execs
Less than a year after transport firms were obliged by the government to start on the path to restructuring major transport contractors expect to make considerable headway thanks to significant private sector interest.
Recently, Ho Chi Minh City-based Tuan Loc Investment and Construction JSC finalised a merger and acquisition (M&A) deal with state-owned Civil Engineering Construction Corporation 4 (Cienco 4), a leading contractor in the transport sector.
Late last week, Saigon-Hanoi Securities JSC – the consultant unit for the deal – announced that 21 million shares or 35 per cent of the state’s share of Cienco 4 which has a chartered capital of VND600 billion ($28.5 million), had been sold to Tuan Loc JSC at a value of VND14,062 per share.
This was the last of the shares the state held in the firm, which means that Tuan Loc,
with its previously acquired 16.5 per cent, has secured a majority position in the company.
Six years ago, Tuan Loc was little known in the sector. Its name only rose to some prominence over the past three years, when it signed some major transport engineering contracts in the southern area under the build-operate-transfer (BOT) model.
Besides Cienco 4, Tuan Loc was reported to be targeting another big M&A deal after it went to the Ministry of Transport (MoT) with a proposal to buy a controlling stake in Cua Lo port in the central region’s Nghe An province. This is the largest port in the north-central region.
At Cienco 1, another major contractor with charter capital of VND700 billion ($33.3 million), the state’s remaining 35 per cent stake (24.5 million shares) are to be transferred to a consortium consisting of Japan’s Hassyu Vietnam and local Yen Khanh Manufacturing Trading Service Company Limited.
Accordingly, Hassyu has registered to buy 17 per cent of Cienco 1’s chartered capital, and Yen Khanh the remaining 18 per cent.
If Cienco 1’s capital divestiture plan goes as planned, the company’s shareholder structure will be relatively well balanced with both Yen Khanh and Hassyu holding 28 per cent respectively, Fecon 10 per cent, the company’s employees 10.8 per cent, and individual shareholders 23 per cent that was sold at the company’s IPO.
Besides these two Ciencos, before the end of this year the MoT envisages completing capital divestitures at several other Ciencos by selling its shares to strategic partners. This plan is still awaiting government approval.
In particular, the controlling stake of Waterway Transport Corporation JSC would be in the hands of Nguyen Thuy Nguyen, the company’s current chairman and also leader of a renowned private building contractor.
Nguyen would retain as much as 64.9 per cent of the company after finalising his buy out of 20 per cent of the state’s current 49 per cent share position.
In an earlier development, private shareholders grabbed control of two other major Ciencos – Vietnam Waterway Construction Corporation JSC and Thang Long Transport Corporation.
According to MoT leaders, since most strategic partners are operating in the same field, changes to shareholder structure would not affect the business or production strategies of these aforementioned companies, or affect the interests of other minority investors or company workers.
“Only by equitising in this radical manner will we ensure corporate governance and efficiency in transport businesses,” said MoT chief Dinh La Thang.
