Despite being backed by the world's biggest spirits company Diageo, Hanoi Liquor JSC (Halico)’s massive losses may make its shares unmarketable.
|Diageo-backed Halico faces unmarketable on UpCOM |
The Hanoi Stock Exchange (HNX) has approved Halico to list 20 million shares on the Unlisted Public Company Market (UpCOM) with the code “HNR.” The first transaction will be organised on June 8 with the reference price of VND31,900, one-seventh of the price Diageo paid for Halico’s shares in 2011.
Currently, Habeco holds 54.3 per cent and Diageo 45.5 per cent in Halico. The listing is generally considered as part of Habeco’s plan to divest Halico due to its bleak business results.
Notably, in September 2012, Halico was detected to be smuggling and evading tax.
|In October 2015, by appointing Indian national Shivam Misra, who has great experience in emerging markets, as new general director in Vietnam, Diageo showed ambitions to grasp opportunities in the fast-growing market. |
In 2014, the company reported a revenue of VND397 billion ($17.4 million) and profit of VND30 billion ($1.3 million) only. In 2015, business results deteriorated even further with the reported loss of VND21 billion ($922,426). As of the end of 2017, the firm reported a consolidated loss of VND255 billion ($11.2 million).
The negative business results are expected to last in the upcoming years. Current performance, in collaboration with the abysmal prospects, may make Halico’s shares unmarketable, unless Diageo wants to take the opportunity to acquire the remaining stake in Halico.
In early 2011, Diageo Plc.—a British multinational alcoholic beverages company—spent VND800 billion ($35.14 million) acquiring a 18.67 per cent stake in Halico from VinaCapital for the unit price of VND213,600 ($9.38).
In mid-2012, Diageo increased its holding in Halico to 45.5 per cent via buying an additional 26.83 per cent from VinaCapital and became the second-largest shareholder, following Habeco (54.3 per cent).
Acquiring a large stake in Halico was meant to tap into its growth potential and success to increase its sales in the Vietnamese market. However, after Diageo got on board, Halico fell on hard times.