Market hurdles impacting equity divestment for firms

Market hurdles impacting equity divestment for firms

An imbalance between supply and demand in the market at the time of sale may be the cause for the challenges.

Customers conduct transactions at a Maritime Bank's office. — Photo bnews.vn

A fresh wave of divestment attempts by Vietnamese enterprises has run into stiff market headwinds, with several high-profile sales, particularly in the banking sector, falling short amid weak demand and pricing pressures.

Maritime Commercial Joint Stock Bank and VietinBank have both highlighted the difficulties they face in offloading stakes under unfavourable market conditions.

Maritime Bank recently announced efforts to facilitate the divestment of more than 2.45 million shares held by the Vietnam Maritime Safety Corporation. Initially scheduled for sale between January 23 and February 13, the transactions were unsuccessful due to market conditions. In an earlier attempt, VMSC transferred only 410,000 shares, leaving it with a remaining ownership stake of 0.07 per cent.

VietinBank has encountered similar obstacles in its planned divestment from Saigon Port JSC. Although the bank registered to sell more than 19.6 million shares, it succeeded in divesting just 275,500 shares, reducing its ownership to 8.94 per cent.

VietinBank’s divestment plan forms part of a broader strategy to concentrate on core banking activities, particularly after absorbing assets linked to non-performing loans.

Both banks cited prevailing market conditions as the main factor limiting their ability to complete the sales.

Comparable challenges have emerged in other sectors. Vietnam National Tobacco Corporation was unable to carry out a share auction for Dalatbeco because of insufficient investor participation.

Planned auctions involving companies under Vietnam National Cement Corporation also failed for the same reason. These cases mirror a wider pattern of unsuccessful divestments, including setbacks reported by the State Capital Investment Corporation.

Experts say such outcomes often reflect a mismatch between supply and demand at the time of sale rather than deeper corporate weaknesses.

Dr Nguyễn Thị Nhàn of the National University of Vietnam told tienphong.vn that difficulties in divestiture did not necessarily signal internal problems within the companies concerned. Instead, she said, market sentiment, pricing expectations and liquidity constraints were typically decisive factors.

Timing would also play a critical role. The release of large volumes of shares could create short-term supply pressure, weighing on prices. If expected valuations are not achieved, sellers might delay transactions in anticipation of improved conditions.

As a result, failed divestments frequently pointed to gaps in price expectations rather than deterioration in corporate fundamentals.

While the market backdrop remains challenging, Nhàn said the longer-term prospects of these enterprises would depend on their growth potential and cash flow generation, not on isolated setbacks in equity sales. 

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