Becamex IDC fails on second auction

This is the second failed auction conducted by Becamex IDC

According to information published on the Ho Chi Minh City Stock Exchange, at the second auction, only four investors bought 5.1 million shares at the price of VND31,000 ($1.37) apiece. Becamex IDC earned VND158 billion ($6.96 million) in proceeds.

Thereby, after the two auctions, Becamex IDC has only sold 24 million shares, equalling 7.7 per cent of the offered volume.

Earlier on December 1, Becamex IDC put 311.2 million shares, equalling 23.6 per cent of its charter capital, on sale at its initial public offering (IPO). As a result, 149 of 158 registered investors won in the bidding with the highest and lowest buying prices of VND40,000 ($1.76-1.35) and VND31,000 ($1.37) per share.

After the bidding, Becamex IDC only acquired VND587.7 billion ($25.87 million) from selling 18.9 million shares or 6 per cent of the offered share volume.

The reason behind so many shares being unmarketable was the corporation’s apathy in communications as well as in publicising information about its IPO.

However, another opinion states that the fault actually lied in its bleak business results as well as the too high offering price, making it difficult to lure in investors, according to newswire Cafef.

Becamex IDC is considered one of Vietnam’s leading property developers, owning 28 subsidiaries and joint ventures in the areas of securities, finance, insurance, banking, construction, trading, real estate, services, telecommunication-information technology, concrete production, construction materials, mining, pharmaceuticals, healthcare, and education, with a charter capital of approximately VND5.5 trillion ($242.1 million).

Especially, it is considered the turnkey investor in developing the Binh Duong Smart City project, which is expected to have a total investment capital sum of $10 billion by 2020 and welcome 125,000 residents.

However, in reality, the project is currently a financial burden to Becamex IDC because the city has only managed to attract a handful of residents so far. In addition, in 2016, Becamex Tokyu, a joint venture in which Becamex IDC holds 48.6 per cent, suffered a massive loss of VND5 billion ($220,175), increasing the corporation’s accumulated loss to VND83 billion ($3.65 million).

Regarding the business results, as of December 31, 2016, the corporation’s total asset value, including cash and property projects, was estimated at VND57.25 trillion ($2.52 billion). However, almost all property projects were unsold.

As of the end of 2016, the corporation borne a debt of VND22.5 trillion ($990.78 million), including short-term and long-term debts.

Becamex IDC currently manages six industrial parks (IPs), however, the revenue and profit from these IPs are still limited. Notably, in 2016, Becamex IDC earned VND619 billion ($27.3 million) in profit from these IPs.

In comparison with the IPO of Vietnam Urban and Industrial Zone Development Investment Corporation (IDICO), another leading urban and industrial zone developers, Becamex IDC demanded far too high an initial price (VND31,000 or $1.37) compared to the VND18,000 ($0.8) of IDICO.

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