Firms rethink equity fundraising as market volatility narrows issuance window

Firms rethink equity fundraising as market volatility narrows issuance window

The adjustments made by several listed companies suggest that the equity fundraising window has narrowed considerably compared with expectations at the beginning of the year.

Traders work in a trading room of a securities firm. — Photo bnews.vn

Expectations that Việt Nam would be upgraded to emerging market status at the beginning of 2026 encouraged many listed companies to accelerate initial public offerings (IPOs), stock listings and capital raising plans.

The prospect of fresh foreign capital prompted businesses to prepare large-scale share issuances to finance investment projects and expansion plans for a new growth cycle. However, market conditions changed sharply by July.

Although the market benchmark VN-Index remained at relatively elevated levels, many individual stocks retreated to their lowest prices in three to five years. 

A sharp sell-off in the second half of July further weakened investor sentiment, reduced market liquidity and made equity fundraising more challenging, prompting several companies to cancel, postpone or revise previously approved capital raising plans.

One notable example is Foreign Trade Development & Investment Corporation of HCMC (Fideco), which plans to convene an extraordinary general meeting of shareholders to cancel a previously approved issuance of up to 38.62 million shares to existing shareholders and 222.7 million shares through a private placement. 

The company will simultaneously seek shareholder approval for a new capital increase plan.

The move comes despite Fideco's substantial funding requirements. As of June 30, the company held only VNĐ20.4 billion (US$780,561) in cash while carrying nearly VNĐ53 billion in borrowings.

Meanwhile, it is preparing to develop two large property projects: a residential development in Cần Giờ, HCM City, with total investment of VNĐ4.3 trillion, and a new urban area in Đông Anh Commune, Hà Nội, requiring VNĐ6.87 trillion.

Together, the projects are valued at more than VNĐ11.17 trillion, exceeding the company's total assets of VNĐ1.05 trillion at the end of the second quarter by more than ten times.

The scale of the planned investments underscores the importance of raising new capital to support project implementation during the 2026-2030 period. Further delays in capital mobilisation could place additional pressure on project preparation.

Fideco was previously part of the Thu Duc Housing Development Corporation ecosystem, with Thu Duc Housing once holding a 43 per cent stake before reducing its ownership to 13.88 per cent in 2021 and relinquishing control.

Following the exit of its major shareholder, Fideco posted a record loss of VNĐ198 billion in 2022 after making provisions of VNĐ199.25 billion for receivables related to Lien Phuong Textile and Garment Corporation. 

By 2025, the company returned to profitability, reporting net profit of VNĐ214.2 billion after reversing around VNĐ180 billion of those provisions and eliminating accumulated losses.

Despite the earnings recovery, both of Fideco's key projects are scheduled for completion only in 2029-2030, meaning the company remains in the early stages of a capital-intensive investment cycle.

Similarly, Saigon Vina Land JSC is also seeking shareholder approval to amend its rights offering plan while providing further clarification on the investment scale and funding sources for its Dragon Riverside City project.

The company had previously approved the issuance of 200 million shares to existing shareholders at a ratio of 9:20, priced at VNĐ10,000 per share, with expected proceeds of approximately VNĐ2 trillion, subject to approval by the State Securities Commission (SSC).

Manufacturing companies have also adjusted their plans.

Phu Tai JSC (PTB) has cancelled a rights offering that would have issued 20.08 million shares, equivalent to 20 per cent of outstanding shares, at VNĐ12,000 each to raise nearly VNĐ241 billion.

Under the original plan, about VNĐ192.3 billion was earmarked for bank debt repayment, with the remainder allocated to investments in granite processing facilities, wood pellet production for export and timber processing projects.

The company decided to abandon the issuance after market conditions deteriorated. Between February 27 and August 6, PTB shares fell nearly 25 per cent, trading below their 200-day moving average (MA200).

The company said cancelling the capital raising plan would not affect its production, business operations or planned investments.

The adjustments made by several listed companies suggest that the equity fundraising window has narrowed considerably compared with expectations at the beginning of the year.

As investor sentiment has become more cautious, liquidity has weakened and foreign investors have continued to record net selling, large-scale share offerings have become more difficult to execute successfully. 

At the same time, lending rates have remained elevated since the start of the year, increasing financing costs for companies that may need to rely more heavily on bank borrowing if equity fundraising plans are delayed. 

Bizhub