SCIC under divestment pressure in Q4
SCIC under divestment pressure in Q4
The State Capital Investment Corporation (SCIC) is under pressure to complete its divestment scheme towards the end of this year with many large companies still in its portfolio.
Characterised as the sovereign wealth fund in Viet Nam, SCIC has planned to divest capital from 85 State-owned enterprises this year, of which it has completed proceedings for 20 companies.
In a seminar with potential investors at the Gateway to Viet Nam 2017 held by Saigon Securities Inc last Friday, the State capital corporation said it would strive to accomplish the plan on schedule with information of its future divestment plans being released by the end of November or early December.
According to market observers, SCIC is under high pressure as many in its portfolio are big companies including Vinamilk (VNM), Binh Minh Plastics JSC (BMP), Tien Phong Plastics JSC (NTP), IT giant FPT Corp (FPT), Viet Nam Construction and Import-Export JSC (VCG), Domesco Medical Import Export JSC (DMC) and Sa Giang Import Export Corp (SGC).
SSI’s current portfolio includes 132 companies with total market capitalisation of around US$4.7 billion, of which its holding in Vinamilk is the most valuable at $3.82 billion, based on Vinamilk’s share price on the HCM Stock Exchange on October 30.
In mid-October, the sovereign fund announced it will auction a 3.33 per cent stake in Vinamilk on November 10. The initial selling price has yet to be decided but SCIC chairman Nguyen Duc Chi said it would be close to the market price.
Vinamilk’s shares are being traded at around VND152,000 ($6.70) per share, and its price has increased about 21 per cent this year.
Meanwhile, SCIC’s divestment plan in FPT Corp and two big pharmaceutical companies, Traphaco and DHG, has yet to be announced.
Besides Vinamilk, Viet Nam Construction and Import-Export JSC is likely to be SCIC’s next major divestment in the context that it previously planned to offload the entire holding of 22 per cent stake in this company.
Simplify procedures
SCIC wants to promote the competitive bidding process (instead of selling a majority stake to strategic investors) to enhance transparency in the divestment process.
This process usually involves hiring consultants, organising road shows (in both domestic and international markets), setting initial selling prices and launching auctions on the stock exchange.
Its efforts to simplify procedures for investors to participate in auctions have been demonstrated in the next share sale of Vinamilk in November. Foreign investors can make deposits in the US dollar while the State Securities Commission allows extending time for registering transaction codes for investors.
Listed companies shall also be exempt from making a public bid but must send interest of purchase to the auction board seven days before the auction.
In addition, SCIC is considering asking for the Government’s approval to sell a whole lot of shares for a better price.
SCIC, established in 2006, operates with two main functions: representing the Government’s capital interests in State-owned enterprises and investing in State capital in key sectors and essential industries. About 1,000 enterprises have been transferred to SCIC since then, in which the Government has completely withdrawn capital from 876 enterprises.
