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3.3% of Vinamilk on sale in October

Released at: 11:02, 05/08/2017

3.3% of Vinamilk on sale in October

Illustrative image (Source: vietcv.net)

Sale follows unsuccessful effort last year, when only 5.4% of 9% on offer was sold.

by Duy Anh

After failing to sell the full 9 per cent of the Vietnam Dairy Products JSC (Vinamilk) put up for sale late last year, the government is now putting 48.333 million shares, or 3.3 per cent of charter capital, up for sale in October.

“The shares are part of the 3.6 per cent that was left over from 2016,” Mr. Nguyen Duc Chi, Chairman of the State Capital Investment Corporation (SCIC), told a press briefing on August 4, adding that it expects the deal to fetch some VND6.5 trillion - VND7 trillion ($285.9 million - $307.9 million).  

He said it would try to remove all “limitations” that were in place last year, when investors subscribed to only 5.4 per cent of the 9 per cent on offer.

To eliminate the prospect of a strategic investor buying the entire 9 per cent stake, the government announced that each individual investor would only be allowed to purchase a maximum of 2.7 per cent. Two Singaporean firms - Fraser and Neave (F&N) Dairy Investments and F&N Beverage Manufacturing - bought the 5.4 per cent of Vinamilk for $500 million, bringing F&N’s total holding to just under 16.5 per cent.

The SCIC said it was satisfied with the 2016 auction given the prevailing market conditions. The investment cap raised concerns, however, about whether the government will adopt a similar strategy when it sells stakes in two large State-owned brewers, the Saigon Beer Alcohol and Beverage Corp. (Sabeco) and the Hanoi Beer Alcohol and Beverage (Habeco), which market and produce Saigon Beer and Hanoi Beer, respectively.

“This time, there are no restrictions on potential buyers, with every interested foreign investor being able to bid,” Mr. Chi said, adding that details on the sale, including the starting price and sales method, will be announced later.

“There are different segments among investors,” he explained. “If we sell all of our shares, it may attract only one segment of investors and there’s no guarantee there will be many interested.”

The sale, if successful, would see the State investment firm reduce its stake to 36 per cent, enough to retain veto rights in the dairy firm, which posted a 17 per cent increase in net profit in the first half of 2017.

Vinamilk’s shares, listed on the Ho Chi Minh Stock Exchange (HoSE), have risen 19 per cent since mid-March, closing at VND154,000 ($6.77) on August 4.

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