Corporations set out capital-raising goals

At the Vingroup AGM in late April, chairman Pham Nhat Vuong captured the attention of investors by announcing plans for initial public offerings (IPOs) of hospitality arm Vinpearl and electric taxi subsidiary GSM.

“We are in the process of listing Vinpearl and aim for a successful IPO by year-end. And currently, there are no plans to divest other businesses,” he said. “The group is also vigorously expanding and enhancing GSM’s presence internationally. Moreover, there is consideration for potentially listing GSM on an international market in the near future.”

Other major companies outlined IPO plans for their subsidiaries this year. At its AGM on April 27, Bamboo Capital Group (BCG) revealed its ambition to list two of its subsidiaries – BCG Energy and non-life insurer AAA – on the Unlisted Public Company Market (UPCoM).

Corporations set out capital-raising goals

Last year marked a significant milestone for BCG with the successful IPO of its real estate arm, BCG Land. Pham Minh Tuan, vice chairman of BCG and CEO of BCG Energy, told VIR, “We’ve filed for the public listing of BCG Energy and are awaiting regulatory approval. We anticipate the official listing to occur in Q2, amidst promising prospects.”

“Given our growing portfolio of renewable energy projects and robust backing from investors and major partners like SK Ecoplant, coupled with the stock market’s resurgence and the vast potential within Vietnam’s renewable and waste-to-energy sectors, we are optimistic about the IPO’s success.”

Currently, BCG Energy is advancing eight wind power projects with a combined capacity reaching 925MW. The company is also slated to start building its inaugural waste-to-energy facility in Cu Chi district of Ho Chi Minh City. This facility will handle 5,000 tonnes of waste daily, with construction commencing in May.

“For AAA Insurance, we are moving forward with our plans to list on the UPCoM, although this will take a longer timeframe, with an expected listing around 2025 or 2026,” Tuan added.

Several prominent firms, including the Bach Hoa Xanh (BHX) chain of Mobile World Group (MWG), have also announced IPO plans for 2024.

MWG disclosed in April that it sold a 5 per cent stake in BHX to Chinese investment fund CDH Investments, a lower amount than the previously intended 20 per cent. Initially hinted at in 2022, the IPO caught attention when Reuters this February leaked a valuation of $1.7 billion for BHX by foreign investors.

Just before its IPO in December 2023, BHX announced it had reached break-even status after covering all operational costs, significantly based on core business activities.

“These strategic adjustments are expected to sustain and enhance our profitability into 2024,” stated a company executive.

Meanwhile, Hoa Sen Group also unveiled its IPO plans for Sen Plastic and Sen Steel Pipe in mid-March. The company is reorganising its operational segments, focusing on stabilising its core business lines.

Likewise, Taseco Land has also made its shares available on the UpCOM exchange under the ticker symbol TAL.

At its AGM on April 25, Masan Group chairman Nguyen Dang Quang revealed plans under consideration to transition the listing of Masan Consumer from the UPCoM to the Ho Chi Minh Stock Exchange. Industry analysts have projected that the listing could generate between $1 billion and $1.5 billion.

Masan Group CEO Danny Le said, “A significant portion of the capital raised will be earmarked for accelerating our push into overseas markets.”

In 2023, the IPO landscape was subdued, with only three companies successfully launching and garnering a mere $7 million, marking a 90 per cent downturn from the previous year. However, 2024 has witnessed a revitalisation starting with DNSE, which successfully raised approximately $36 million in its IPO. Other successful listings followed, including Hydropower JSC Hua Na and Quy Nhon Port JSC, among others.

VNDirect has articulated a cautious outlook for the IPO market, attributing the ongoing sluggishness to not only persistent liquidity issues but also to stricter regulatory frameworks imposed by the State Securities Commission (SSC).

“Newly instituted rules demand that companies show profitability for two consecutive years before their IPO, an extension from the prior one-year requirement, and must present a clean slate with no accumulated losses,” noted VNDirect. “These new prerequisites, while designed to filter for companies with robust financial health and stable growth trajectories for the stock market, also inadvertently dampen the entrepreneurial spirit, particularly in the technology sector. This results in venture capital funds being hesitant to channel investments into Vietnamese startups unless they are poised for international listings,” the brokerage added.

Additionally, IPO candidates are now required to document their capital utilisation meticulously from inception to the filing date, posing significant challenges for long-established companies. The extended duration for processing IPO applications further contributes to investor apprehension among foreign stakeholders. “Nevertheless, we anticipate a resurgence in IPO activities in 2024, spurred by an improvement in market liquidity,” VNDirect concluded

Bui Van Trinh, assurance leader of Deloitte Vietnam, stated, “The limited number of IPOs in Vietnam was primarily due to stringent regulatory processes and substantial net capital outflows from foreign investors, influenced by global and domestic factors that negatively affected market liquidity throughout the year.”

On the outlook through to 2024, Tay Hwee Ling, disruptive events advisory leader of Deloitte Southeast Asia and Singapore, said, “Amidst this challenging macroeconomic environment, many stock exchanges are dealing with the trend of Southeast Asian companies looking to list on large overseas markets to access more capital and investors, or where they perceive they can secure the best valuations. For quite a few companies, listing in the US is attractive due to the deeper pool of investors.”

The SSC has introduced supportive policies aimed at revitalising the market. In February, it stressed its commitment to streamline the listing process. They plan to closely integrate IPOs with immediate listings, thereby shortening the timeline between a company’s public offering and its market debut.

Chairwoman Vu Thi Chan Phuong outlined the proactive measures being adopted. “We are collaborating with the Vietnam Securities Depository and Clearing Corporation and various entities to ensure that in 2024, listed companies will streamline their information disclosures, reducing the need to communicate with multiple layers,” Phuong said.

Vietcombank Fund Management (VCBF) highlighted the VN-Index’s potential, driven by promising economic indicators, robust corporate earnings, and sustainably low interest rates. “The market’s valuation is increasingly appealing, with a price-to-earnings ratio at just 11.7, enticing substantial capital inflows,” stated a VCBF representative.

According to Nguyen Hoai Thu, managing director and head of investments at VinaCapital, given the earnings growth, the ratio for the VN-Index is expected to average between 10 and 11 times for 2024, approximately 15-20 per cent lower than the valuation levels of Singapore, Malaysia, Indonesia, Philippines, and Thailand.

“Additional factors bolstering the stock market include increasing consumer demand, a rise in foreign investment, and the anticipated elevation of Vietnam’s market status within the next 2-3 years,” Thu said.

Firms change capital-raising plans amid bearish sentiment Many firms have begun to change their capital-raising plans amid the recent decline in the stock market, according to experts.