Local brokerages rush to raise capital

Vietnamese securities companies are looking to raise capital to supplement business activities and enhance operational efficiency.

 

Viet Capital Securities Company (VCSC) has announced a bond issuance plan worth VND331.5 billion (US$14.3 million) from now until January 2020.

This offering is part of a plan approved by the Board of Directors with a total bond issuance value of VND500 billion.

The bond yield rate of each issuance depends on the business performance of the company at that period, but must not exceed average interest rates of mid-term deposits at the State-owned Bank for Investment and Development of Viet Nam and VietinBank, plus 3 per cent per year.

VCSC will use VND500 billion collected from the bond issuance to supplement capital for securities trading and margin lending.

The payout for bond yields will come from margin trading, proprietary trading and brokerage consultancy services.

The Board of Directors of Saigon Securities Company (SSI) is also consulting shareholders about a share issuance plan to pay dividends at 16 per cent. If approved, SSI will increase its charter capital to over VND6 trillion.

Domestic securities companies are trying to raise capital to keep up with foreign companies that are increasing in size, creating strong competitive pressure.

For example, South Korean securities firm Mirae Asset (Vietnam) Securities Co Ltd is in process of raising its charter capital from VND4.3 trillion to over VND5.45 trillion, thereby becoming the securities company with largest charter capital in the market.

Among 18 companies with charter capital of over VND1 trillion, there are five foreign-invested companies: Mirae Asset, KB Viet Nam, KIS Viet Nam, Yuanta Viet Nam and Maybank Kim Eng.

Vu Duc Tien, general director of Saigon-Hanoi Securities Company (SHS), said foreign brokerages had been developing rapidly in recent years, especially in terms of capital scale with the backing of their parent companies.

This created many challenges for domestic securities companies, Tien said.

Early this year, SHS issued 101.87 million additional shares, including issuing shares to pay dividends to existing shareholders at a rate of 25 per cent; offering to the public at a rate of 66.67 per cent at a price of VND12,000, and issuing shares under the Employee Stock Ownership Plan (ESOP) with a rate of 4.99 per cent.

Other domestic securities companies planned to raise capital in 2019 but have delayed until 2020.

MB Securities Company (MBS) recently approved a plan for three rounds of share issuances to increase its charter capital from VND1.2 trillion to VND1.7 trillion, including 35 million shares for existing shareholders, five million shares under ESOP and a dividend payout at a rate of 10 per cent.

“Increasing capital helps MBS increase the credit limit for margin lending, promoting bond and stock trading, meeting capital demand and improving risk management. MBS is completing procedures to raise capital by the end of this year or early next year,” said General Director Tran Hai Ha.

Vu Hong Son, chairman of the board of directors of Everest Securities JSC (EVS), said the company’s plan to increase charter capital from VND600 billion to VND1 trillion had not been implemented and would be delayed until 2020.

“The additional capital will help the company improve the quality of services and consulting effectiveness in order to bring sustainable financial benefits to customers,” Son said.

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EVS 9,300 0 %
MBS 15,400 0 %
SHS 7,800 100 +1.30%
SSI 19,600 100 +0.51%

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