SCIC to divest 9% stake in Vinamilk this year

Vinamilk is a giant brand name with high value. The company's real asset is under US$1 billion, but its market price is up to $9 billion.-Photo vinamilk

Speaking at a press conference held in Ha Noi on September 23 on the corporation's divestment plans in 10 leading state-owned enterprises, Chi said SCIC's total market cap in these enterprises was some VND100 trillion (US$4.48 billion), of which state ownership in Vinamilk was 90 per cent.

Chi said SCIC would hire consulting agencies this month for Vinamilk. The starting price would be announced in November and road shows would be conducted in the country and overseas immediately.

"The price of Vinamilk will depend on the domestic and foreign market situation and the macro economy of the country and the world. However, it will not be lower than the market price at the transaction time," Chi said.

The Government currently holds 45.1 per cent stake in Vinamilk, which is listed as VNM on the stock market. The company is one of the country's most sought-after equities and foreign investors have long been interested in Vinamilk thanks to its strong prospects and expansion plans.

The board of directors of Vinamilk formally approved the removal of the 49 per cent foreign ownership cap in late June, paving the way for an expected surge of interest from overseas investors in the local company.

Chi said Vinamilk was a giant brand name with high value. The company's real asset is under US$1 billion, but its market price is up to $9 billion. Therefore, the government is mulling over policies to preserve the Vietnamese brand name following its divestment.

SCIC will divest state capital in the nine remaining enterprises in 2017. The enterprises are Bao Minh Insurance Corp, Vietnam National Reinsurance Corporation, Tien Phong Plastic JSC and Binh Minh Plastic JSC, as well as Vietnam Property and Infrastructure JSC, FPT Corp, FPT Telecom, Ha Giang Mineral Mechanics JSC and Sa Giang Import Export Co.

At the conference, Chi presented concrete plans, including the implementation itinerary, selecting the consulting agency, issues related to the assessment of the enterprises' value and share, methods of selling shares and ways to preserve brand identities.

SCIC will select the consulting agency this year. The agency could be domestic or foreign, but it must be qualified to handle the consulting work. In case there is no qualified agency, SCIC will hire a consulting joint-venture company.

The list of domestic consulting companies includes Saigon Securities Inc, Ho Chi Minh City Stock JSC and Bao Viet Stock JSC, in addition to foreign groups such as Credit Suisse and Morgan Stanley.

Chi said after the consulting work finished, SCIC would immediately begin the divestment process. Based on the market situation and the enterprises' operation results, SCIC would fix the floor price to organise batch auctions of competitive bidding to get the highest price.

The divestment will be carried out publicly and transparently. However, it needs an itinerary and orders to preserve the State asset value in the most effective way, besides ensuring stable development for enterprises and the balancing state of the capital market.

The sale of shares will abide by the market rules, with road shows to be conducted in the country and overseas, based on principles that do not limit the number of investors. The investors could be domestic or foreign ones, or organisations or individuals, but they must meet conditions and have the necessary funds.

Chi said the funds collected from the divestment would be used according to the National Assembly's resolution. Some VND30 trillion from the divestment would be invested in developing and building a number of key works, including Bach Mai Hospital 2 and Viet Duc Hospital 2 in Ha Noi and Cho Ray General Hospital in HCM City.