Foreign investors welcome State-owned companies’ IPOs
Foreign investors welcome State-owned companies’ IPOs
Bank shares and state-owned enterprises’ (SOEs) IPOs (initial public offering) have become highly attractive to foreign investors.
The bank share price has increased by 23% on average in the last three months, which represents the sharpest increase since 2013 and a two-fold increase compared with the region’s.
According to Bloomberg, the Vietnamese bank share price has seen the sharpest increase in Asia.
Investor confidence in Vietnamese commercial banks increased after the Vietnam Asset Management Company (VAMC) announced it had bought VND123 trillion worth of bad debt, helping the bad-debt ratio of the Vietnamese banking sector fall from 17% to 3.25% after three years of restructuring.
Meanwhile, at the M&A (merger and acquisition) forum held recently, chair of the State Securities Commission (SSC) Vu Bang said that the legal document on lifting the foreign ownership ratio ceiling would be released in August.
According to Deputy Governor of the State Bank Nguyen Kim Anh, 12 weak credit institutions have been eliminated in a plan to restructure banks and the gold market.
Meanwhile, an analyst, though saying that bank shares are attractive to investors over the long term, said investors still hesitated to buy bank shares.
He said that unclear information about bad debt settlement and bank restructuring has made investors reluctant to inject money into banks.
The Saigon Asset Management (SAM), for example, a large investment fund, has invested in bank shares, but it has also withdrawn capital.
SAM’s President and CEO Louis Nguyen said bank share prices go up and down all the time, while they still cannot see stable growth. Banks’ profits were also unstable in the restructuring process.
The representative of another foreign investment fund also noted that Vietnamese commercial banks were meeting certain difficulties while settling debts. The bad debts have forced banks to make higher provisions against risks.
Foreign investors now keep a close watch over SOE equitization and IPO plans, hoping to find great opportunities in the enterprises.
According to Nhu Dinh Hoa, CEO of Bao Viet Securities, about 380 SOEs will make IPOs. These include profitable businesses, such as MobiFone, a telecom giant, Sabeco, a big brewery company and the Vietnam Cement Corporation.
Hoa believes that in order to push up the SOEs’ IPO, the government should think of raising the share proportion to sell to investors.
A source said the Ministry of Finance was considering amending the regulations on SOEs IPOs.
Once SOEs shift to operate as joint-stock companies, they will list shares on UpCom market first, and launch an IPO and list on the bourse when they sell all their capital.
