Deal heralds new SJV era

Under the deal, British Virgin Islands-registered Hong Long Ltd will buy 10 per cent of Saigon Securities Incorporated (SSI), one of Vietnam’s leading securities companies.
Nguyen Hong Nam, deputy general director of SSI, told Vietnam Investment Review that Hong Long would now be able to sit on SSI’s management board.
Hong Long Ltd is a subsidiary of US-backed Vietnam Partners LLC (VPL), an investment and consulting firm that was co-founded by Bradley Lalonde, former CEO of Citibank Vietnam, and James Lewis, who worked as managing director of Morgan Stanley for 17 years.
Nam said Hong Long’s experience and expertise in the areas of banking and the securities market would help SSI operate in a more professional manner and increase its competitiveness.
Ho Chi Minh City-based SSI is one of Vietnam’s leading securities companies, holding more than 60 per cent of the brokerage market for foreign investors.
Last year, SSI recorded a net profit of $1 million, nearly 70 per cent of its registered capital of VND23 billion ($1.46 million). The company plans to increase its capital to VND50 billion ($3.2 million) this year.
SSC officials said allowing Hong Long Ltd and SSI to establish the partnership was in line with the government’s strategy to encourage foreign companies to establish securities joint-ventures (SJVs) in Vietnam.
Representatives from local securities companies said the establishment of SJVs with foreign involvement would allow local brokerages to gain experience from well-developed foreign partners.
They said SJVs would also create a professional and proactive business environment for local securities firms, contributing to developing the country’s fledgling bourse.
“We should encourage the participation of foreign concerns who have expertise and experience. The important issue is who, when and how to form SJVs,” said First Securities Company director Tran Thien The.
“In terms of time, now is the right period to set up SJVs. Three key factors in choosing the right foreign partners include financial ability, experience and prestige on the international market,” he said.
Local securities firms should be formed as shareholders to assist in the transfer of ownership to foreign partners, he said.
He added his firm was negotiating with a Taiwanese securities company to establish a partnership, but declined to elaborate.
“Basically, the two sides have already reached a consensus and we are awaiting the SSC’s nod,” he said.
Vietnam’s stockmarket is now home to 13 securities companies, all of which are domestic, and seven of which were formed by commercial banks.