Vinamotor auction: second time’s the charm?

Photo source: phapluatplus.vn

The Ministry of Transport (MoT) requested that enterprises joining the auction have a minimum equity of VND926 billion ($41.2 million) as of June 30, 2015, and a positive balance. As an additional criterion, enterprises must commit to not transferring their Vinamotor stakes for five years.

After the ministry’s disclosing of the conditions, Vietnam N.A Motor Co. Ltd (N.A Motor), TN Development JSC (TN), and Thanh Cong Group submitted documents to attend the auction. However, only two enterprises meet these criteria, namely N.A Motor and TN.

Established in 2005, N.A Motor specialises in distributing cars and motorbikes, selling spare parts, vehicle insurance, as well as providing vehicle maintenance and repair. The company is currently expanding its operations to the real estate sector. N.A Motor, with its solid finances, commits to making Vinamotor become the country’s leading car manufacturer and distributor. As of June 2015, the company has a total equity of VND1.11 trillion ($49.1 million).

Established in 2002, TN operates in selling cars, motorbikes, consumer goods, and supplying accommodation services, and real estates. Purchasing Vinamotor is part of the company’s expansion plan. As of June 2015, the company has a total equity of VND1.22 trillion ($53.9 million).

Previously, in March last year, a lot of firms expressed interest in acquiring a stake in Vinamotor as soon as the government greenlighted the divestment of the state’s entire 97 per cent stake for VND855 billion ($40 million). Two of these were TMT Motor Joint Stock Company (TMT) and SACOM Wires and Cables Company Limited (Sacom), both failing to meet the MoT’s criteria.

Vinamotor’s divestment appears to be a means to mend its grim operation prospects. In recent years, many of its subsidiaries reported very low levels of profit.

The company failed painfully in its IPO in March 2014. It auctioned 51 million state-owned shares for an initial price of VND10,000 (47.3 UScents) per share, however, only 3.1 per cent of its shares were taken up, falling incomparably short of its original expectations, acquiring only VND15.7 billion ($735,370).

Vinamotor’s main products are coaches and trucks of the Vinamotor and Transinco brands. The firm also dabbles in car repair and assembly, and produces spare parts, but it faces heavy competition from its foreign rivals in these fields.

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