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UBS AG Singapore & SSI to advise on Vinamilk stake sale

Released at: 12:37, 05/10/2017

UBS AG Singapore & SSI to advise on Vinamilk stake sale

Illustrative image (Photo: Vinamilk)

Two to consult on sale plans and initial price and seek domestic and foreign buyers.

by Quang Huy

UBS AG Singapore and Saigon Securities Incorporated (SSI) have been selected to advise on the sale of a 3.33 per cent stake in State-owned Vinamilk, the country’s most valuable company, according to the State Capital Investment Corporation (SCIC).

The consortium will provide consultancy on sale plans, set the initial price, and seek domestic as well as foreign buyers. SCIC pledged to work closely with the advisors to sell Vinamilk’s shares in a public, transparent and legal way, to ensure the optimal proceeds and avoid vested interests.

This will be a repeat auction of Vinamilk shares that were left unsold after an attempt in 2016, with the government’s investment arm, SCIC, intending to offer the shares again this month and realize VND6.5-7 trillion ($286-308 million).

The new advisers replace Morgan Stanley Asia (Singapore), which along with SSI and VinaCapital Corporate Finance Vietnam advised on the last divestment. If the sale goes through this time, some 36 per cent of Vinamilk shares will remain in government hands, enabling it to retain its veto. By dominating the domestic dairy market and boasting strong earnings, Vinamilk sends the government some $90 million in annual dividends.

The plan was to divest 9 per cent of Vinamilk’s shares at the last auction in 2016. Fraser and Neave (F&N) in Singapore acquired 5.4 per cent through two subsidiaries that hit the 2.7 per cent individual bidder limit. The deals were worth a total of $500 million at VND144,000 ($6.3) per share; 7.7 per cent higher than the market price. F&N is now Vinamilk’s largest foreign shareholder, with a combined interest of 18.74 per cent.

The Ho Chi Minh City Securities Corp. expects Vinamilk’s profit in the first nine months of the year to reach VND8.6 trillion ($378.4 million), up 15 per cent year-on-year.

“This is a high-value asset and we expect to gain experience from each auction,” SCIC Chairman Mr. Nguyen Duc Chi told foreign newswire Nikkei Asian Review. He said the divestment needed to be carried out carefully for the State to do well without distorting the stock market.

Vinamilk shares closed at VND148,600 ($6.5) on October 4.

Its sale is vital to SCIC’s overall scheme initiated in 2015 to divest from ten leading State-owned enterprises (SOEs), including Vinamilk, FPT, FPT Telecom, Bao Minh Insurance, and Binh Minh Plastic. Another five SOEs were added to the list this year. The lack of progress and major losses have been variously attributed to regulatory hurdles, mismanagement, wrongdoings, and the time needed for the new government cabinet to settle in.

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